LIC IPO: Here's What You Should Know In Details About The Insurer Before Investing

LIC IPO: A special discount of Rs 45 is being offered to retail investors and employees of LIC while a discount of Rs 60 per share will be offered to the policyholders applying for the IPO

New Delhi: The much awaited initial public offering (IPO) of the country's largest insurer, Life Insurance Corporation (LIC), is set to hit the market next week. The Securities and Exchange Board of India (Sebi) has allowed the government to offload 3.5 per cent stake in the insurer.

The IPO consists of an offer for sale of up to 31.62 crore shares by the government. The issue is set to open on May 2 for anchor investors and on May 4 for subscription. 

Here’s what you should know about the biggest IPO to launch till date

LIC IPO Date

The state-run insurance behemoth has fixed the price band at Rs 902-949 per share for the Rs 21,000 crore issue likely to open on May 4. The issue will be open for subscription on May 4 and is expected to close on May 9.

What’s there for policyholders?

There are two important things for policyholders to know before they invest in the IPO. The policyholder should have their PAN updated on the LIC portal and a demat account.

Policyholder’s discount

The insurer also informed that 10 per cent of the issue size is being reserved for policyholders. It has also announced a special discount for its policyholders. According to the life insurer’s red herring prospectus (RHP), a special discount of Rs 45 is being offered to retail investors and employees of LIC applying for the IPO. Meanwhile, a discount of Rs 60 per share will be offered to the policyholders.

How to check PAN-LIC status

You can visit https://linkpan.licindia.in/UIDSeedingWebApp/getPolicyPANStatus

Just enter Policy Number, Date of Birth, and PAN information and the captcha. Then press the Submit button.

How to Link Policy Number with PAN

Policyholders can easily link their policies with their PAN online. However, those who are not technologically equipped can ask their agents to do it for them.

Market share

LIC holds a lion’s share in the life insurance market in India. The government aims to raise $12 billion from selling a stake in the IPO with a view to help it bridge a deficit gap this fiscal year.

The national insurer is not only the world's largest when it comes to home-market share with over 64.1 per cent of the total gross written premium as of 2020 but also the one that offers the highest return on equity at 82 per cent, apart from being the third largest in terms of life insurance premium, according to Crisil report.

Financials

LIC has reported a profit after tax of Rs 1,437 crore for the first half of the financial year 2021-22 as compared with Rs 6.14 crore in the year-ago period. The new business premium growth rate stood at 554.1per cent in H1FY22, compared with 394.76 per cent during the corresponding period of the preceding financial year.

Embedded Value

According to the DRHP, the embedded value has been set at Rs 5.39 trillion. Usually, the companies trade at around 3-4 times the EV.

How much stake is on sale?

The government has notified that it will sell 5 per cent of the total capital in the form of shares. So, it will retain a 95 per cent stake in the company.

The LIC was formed on September 1, 1956, by merging and nationalising 245 life insurance companies in India, with an initial capital of Rs 5 crore. Even as a lot of private life insurers have arrived at the scene, LIC continues to be the dominant life insurer in India.

(With inputs from PTI)