LIC, Life Corporation of India, the country’s largest and most reliable issuance company, is to shake the stock market with the highest IPO, Initial Public Offering, to raise up to 65,000 crores, making it the biggest listed financial service provider after HDFC bank.
The government plans to sell 5% of its stake in the IPO, expecting the proceeds will help it bridge a deficit gap this financial year. According to the reports, IPO documents filed with the regulator indicate that the insurance behemoth may be valued in excess Rs. 12.5 crore, making it the valuable than all other listed government-owned companies.
The government would keep its majority of stakes in the LIC. As per the law, the stake can not come below 51%, and that will be retained, and even in five years, it could not sell more than 25% of its stake in LIC.
LIC is the world’s largest home-market share company with over 64.1% of the total gross written premium as of 2020. The insurance company offers the highest return of equity at 82%, apart from being the third-largest in terms of insurance premium.
At 64% or GWP (Gross Written Premium) of $56.4 billion, the LIC market share is unparalleled globally, no other instance company has reached such a high market share, as per the reports.
LIC has the highest return on equity of 82% compared to its peers as of 2021. This is followed by Ping, an insurance group of China, which is the world’s largest at 19.5%, Aviva at 14.8% and China Life Issuance at 11.9%.
LIC comes at the fifth position, in terms of the total assets, with $522 billion clipping at 8% annually between 2019 and 2021.
With this IPO, the company is expecting to reach the market at Rs. 43.40 lakh crore or $59.21 billion by 2022 and Rs. 58.9 lakh crore or $78.63 billion by 2027, according to the London-based Brand Finance consultancy prediction.
Finance Minister Nirmala Sitharam, in her Budget 2022-23 Budget, said- “the Public Issue of the LIC is expected shortly.”
Within a week, the DRPH, Draft Red Herring Prospectus, for LIC IPO will be filed. The IPO is expected to come out by March.
