LIC IPO Date, Details, Update, Valuation and Live News 2020

Published on Friday, July 31, 2020 by Chittorgarh.com Team

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LIC IPO Date, Details, Update, Valuation and Live News 2020

LIC is planning to bring an IPO to sell 10% of its stake and get listed at BSE and NSE stock exchanges. This fast track IPO is part of the disinvestment of government stake in LIC. The government of India is planning to raise funds between ₹80,000 to 1 lakh crore through this IPO.

The LIC IPO 2020 offers a great opportunity to retail investors and employees to invest in the company for the long term as well as making quick listing day gains. It is also speculated the LIC Policy Holders may get a reserved quota in this IPO.

In the Union Budget speech for 2020-21, Finance Minister Nirmala Sitharaman had said:

Listing of companies on stock exchanges disciplines the company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO).

Topics

  1. LIC IPO Details
  2. LIC IPO Advantages and Disadvantages
  3. LIC IPO Updates
  4. About LIC

Note:

LIC has not filed the DRHP as of Aug 2020. All information on this page is based on the LIC IPO news available in the public domain and information gathered by our journalists through their sources. We will keep posting you with the latest updates on LIC IPO on this page.

LIC IPO Details

LIC IPO Information

Issue Open Date

Expected in FY 2020-21

Issue Close Date

Expected in FY 2020-21

Issue Type

Book Building Offer

Price Band

₹[.]to ₹[.] per share

Employee Discount: [.]

Minimum Lot Size

[.]

Face Value

[.]each

Issue Size

₹80,000 to ₹1,00,000 crore* [Tentative]

Book Running Lead Managers

-

Registrar

-

Book Building Proportion

Employee Reservation : [.] shares

QIB (50%) : [.] shares

NII (15%) : [.] shares

Retail (35%) : [.] shares

LIC IPO Date

LIC IPO is one of the most eagerly awaited IPO of the decade and all are keen to know of its launch date. As per the budget announcement, the IPO is likely to be launched in the second half of FY 2020-21.

The process that was slowed down due to the pandemic has now kick-started in full swing. The government has finalized Deloitte as the pre-initial public offer (IPO) transaction advisors. There is still a lot of work to be completed in the pre-IPO phase and we will have to wait for the dates to be announced.

LIC IPO Size

The government is expected to sell not more than 10% of its stake in LIC. The rough estimates of valuation done by analysts vary between ₹8 lakh crores to ₹11 lakh crores. Considering the government sells 10% of its stake, the IPO size can be expected to range between ₹80,000 to 1 lakh crore. Though this is based on estimates we may have to wait for actual valuations to be done which is going to be a mammoth task.

LIC IPO Price

The price band for IPO can be determined based on the actual valuation and the existing share price of the competitors in the insurance industry. The issue price is usually announced one week before the issue opens for the public for subscription.

LIC IPO Valuation

Various analysts have provided rough estimates on the valuation of LIC to be between Rs.8 lakhs to 11 lakhs crores. However, the government will need to arrive at the actual value of LIC before filing DRHP.

The process to determine the actual valuation of LIC is going to be a tough task considering the giant size of the company. It will need a team of professionals with sound knowledge of the insurance industry.


LIC IPO Advantages and Disadvantages

Amidst all the mixed opinions whether the decision to disinvest LIC is good or bad, LIC IPO has below benefits to offer:

  • It will enhance transparency and governance in LIC's operations.
  • It will help attract foreign capital to the insurance industry.
  • Retail investors and employees can be part of the wealth created by the insurer by participating in its equity.
  • With government selling not more than a 10% stake in LIC, the government will still be the major stakeholder and there will be no change in its ownership. The IPO is not intending to have any impact on the policyholders and employees.

LIC IPO Updates

Date

Event

Feb 01, 2020

Govt proposed LIC IPO in Union Budget for 2020-2021.

Jul 29, 2020

Deloitte is selected for pre-IPO transaction advisors.


About LIC

Life Insurance Company of India (LIC) is the oldest and largest 100% Government of India owned insurance company formed by the LIC Act 1956. LIC has been treasuring the trust of Indians for the last 63 years and strives to meet its slogan of "Your welfare is our responsibility" in every possible way. Started with an initial capital contribution of ₹5 crores from the government, today the asset-value of LIC has reached over Rs 31 lakh crore.

LIC Key Facts

  • LIC has its presence all over India with its corporate office headquartered in Mumbai. As of 31st March 2020, LIC has 8 zonal offices, 113 divisional offices, 2,048 branch offices, and 12 lakhs+ agents. LIC also has international presence through its branches/joint venture companies/wholly-owned subsidiary and is present in 14 countries including places like Singapore, Kenya, Sri Lanka, Nepal, Bangladesh, Fiji, Kuwait, Mauritius, Oman, Qatar, UAE, UK, and Bahrain.
  • The product mix of LIC includes conventional insurance plans along with unit plans, special plans, pension plans, micro insurance plans, and health plans. As of 31st March 2019, LIC has approximately 290 million policyholders.
  • LIC's staff strength is of 111,979 employees as of 31st March 2019.
  • LIC is a profitable public sector undertaking. As of 31st March 2019, LIC has a net premium income of ₹337,000 crores (an increase of 6.08% compared to the previous year) and profit after tax of ₹2,688 crores. The profit from its equity investment stands around Rs.23,000 crore.
  • LIC holds a giant's share in the insurance industry with 66.24% market share in terms of total first-year premium (premium collected from new business in a financial year excluding single premium) and 74.71% in terms of the number of policies.
  • The Gross NPA of LIC has been on the rise and is at 6.15% as of 31st March 2019. However, considering the huge asset size, there is not much to worry as LIC has made considerable provisions for the bad loans.
  • Key Ratios of LIC as of 31st March 2019:
    • The solvency ratio of LIC stands at 160% which is little above the required solvency ratio of 150% as stipulated by the Insurance Regulatory and Development Authority (IRDAI).
    • The LIC persistency ratio indicating a pool of satisfied customers in terms of the number of policies and terms of annualized premium ranges between 50-60% and 60-77% respectively.
    • The claim settlement ratio of LIC is the highest of all insurers and stands at 98%.

Frequently Asked Questions

  1. 1. What does LIC IPO mean?

    The government of India is diluting its partial stake in LIC by launching the IPO and inviting the public to participate in its equity.

    With the launch of LIC IPO and listing, LIC will come under a direct scanner of SEBI and will have to comply with requirements for listed firms. This will enhance the transparency of LIC operations and strengthen overall corporate governance.

     

  2. 2. When will LIC IPO come?

    LIC IPO has been targeted to launch in the second half of the fiscal year 2020-21

    The government has set the ball rolling to launch the IPO as soon as possible and preparations have started in full swing. An IPO process generally takes four to six months. Considering the pre-IPO process has started now, we need to wait and watch if the government can meet the targeted launch period.

     

  3. 3. How to apply in LIC IPO Zerodha?

    To apply for LIC IPO through Zerodha, you need to have an account with Zerodha. The IPO will be available on the Zerodha website to apply when it's open for subscription.

    Steps to apply for LIC IPO through Zerodha:

    1. Login to Console and look for an IPO option from the menu.
    2. Select the LIC IPO and enter the UPI ID and bid details.
    3. Accept the mandate collect request on the UPI app.

    This will block the bid amount in your bank linked to the UPI app and the application will get submitted to exchange.

     

  4. 4. When is LIC IPO coming?

    LIC IPO is likely to come in the second half of the financial year 2020-21. The pre-IPO process has started and advisors have been engaged to assist LIC in the listing process. The government has put the process on fast track mode and we should expect to hear the launch dates soon.

     

  5. 5. How to buy LIC IPO?

    The LIC IPO application can be made either online through ASBA (using net-banking) or UPI (through your broker).

    To apply online through ASBA, you need to have a bank account with net banking facilities. You need to fill and submit the online IPO application forms with the bank.

    To apply online through UPI, you need to submit the IPO application through your broker.

     

  6. 6. When is LIC IPO expected?

    LIC IPO is likely to be expected by March 2021.

    An IPO process normally ranges between four to six months. The government needs to complete a long list of activities in the pre-IPO phase with the help of advisors including deciding the timing for IPO, company valuation, preparation of restated financial statements, DRHP, filing of IPO, finalizing IPO details etc. Considering the huge size of LIC, arriving at company valuation is going to be a challenging and time-consuming task.

    In addition to these normal pre IPO processes, the government will also need to amend the LIC Act 1956 before the launch of IPO which is going to add to the timeline.

    Considering all these factors, we need to see if the targeted IPO timelines are adhered to.

     

  7. 7. How the LIC IPO will impact the employees?

    The LIC IPO should not change anything for its employees. Moreover, it is speculated that employees may get special quota at a discount to participate in LIC's equity.

    With the announcement of government selling a partial stake in 100% owned LIC, it created panic amongst employees with fear of privatization. However, as per the company management, this stake sale will not change the ownership of LIC as the government will sell not more than 10% of its stake. Thus, LIC will still qualify as government-owned and should not be viewed as the privatization of LIC with no impact on its employees.

     

  8. 8. How will LIC IPO impact the existing policyholders?

    The LIC IPO is not expected to have any impact on the existing policyholders.

    On the other hand, it is expected by the experts that the listing of LIC will indirectly benefit the policyholders. The listing of LIC will enhance transparency and governance in its operation as LIC will have to adhere to all listing requirements as per SEBI rules thereby boosting its efficiency.

    Moreover, it is speculated that LIC policyholders may get a reserved quota in this IPO.

     

  9. 9. Will LIC IPO benefit the existing policyholders?

    LIC IPO is expected to indirectly benefit the policyholders by boosting LIC's operational efficiency with its listing. It is also speculated that the IPO may be launched with a reserved quota for policyholders.

    With the listing of LIC, LIC would come under direct SEBI scanner and would be required to adhere to the listing requirements. This would enhance transparency in its operation and strengthen overall corporate governance within LIC.

    Since the announcement of LIC IPO, it has created fear in the minds of policyholders to lose the sovereign guarantee offered by LIC. However, the Finance Minister has assured that the interest of policyholders will be protected as LIC will retain its sovereign guarantee.

    Having said so, it is also expected that the LIC Act 1956 will require amendments before the launch of IPO in terms of dividend distribution amongst other things. Thus, we need to wait for the outcome to see if the change in Act would have any impact on the policyholders.

     

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3 Comments

Tarunendu goswami
3. Tarunendu goswami  Aug 2, 2020 08:49 I Like It. | I Don't Like It. 1 | Report Abuse Reply
Is it compulsory to have de-mat account ? Is it required before application?
Jayanta Bera
2. Jayanta Bera  Aug 2, 2020 05:40 I Like It. | I Don't Like It. 1 | Report Abuse Reply
May I God bless you
PRAKASH HALSAR
1. PRAKASH HALSAR  Aug 1, 2020 18:11 I Like It. | I Don't Like It. | Report Abuse Reply
Nice ,informative, excellent








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