The much-awaited initial public offering (IPO) of insurance behemoth Life Insurance Corporation of India (LIC) is expected to hit the market soon. “The public issue of the LIC is expected shortly,” Finance Minister Nirmala Sitharaman said in her Budget speech.
Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey announced on Tuesday after the Budget cane out, that the draft red herring prospectus (DRHP) of Life Insurance Corporation IPO-expected within two weeks.
Earlier, there was speculation in the media that the government may push the LIC IPO further. Amid such speculation, Tuhin Kanta Pandey, secretary in the Department of Investment and Public Asset Management (DIPAM), tweeted on December 19, 2021: “Some media speculation doubting the feasibility of LIC IPO this fiscal year is not correct. It is reiterated that plan is on course for the IPO in the last quarter of this fiscal.”
Last week, when the stock market started falling on the back on US Federal Reserve rate hike and emerging geopolitical tension in Eastern Europe, there was again speculation that the Indian government would delay the LIC IPO. But today, on February 1, the finance minister made it clear that the government is in no mood to push it further.
The government is planning to raise Rs 70,000 crore from the LIC IPO, which is likely to be the biggest IPO in Indian history. “LIC IPO would be an IPO to watch out for given its sheer size and (company’s) market leadership in the life insurance space. It will be an IPO in focus,” says Siji Philip, senior analyst, Axis Securities.
Experts believe that despite some correction in the market, this is the right time for launching the LIC IPO. “Compared to the rally, the correction has been mild. There is still significant appetite for equities and quality IPOs. If the issue is priced well, getting the IPO subscription may not be issue,” says Nilesh Shetty, fund manager, Quantum Mutual Fund.
LIC has been providing life insurance in India for more than 65 years and is the largest life insurer in India in terms of Gross Written Premium (GWP) with a market share of 64.10 per cent. It has a market share of 66.2 per cent in terms of new business premium. In terms of individual policies and group policy issued, it commands the lion’s share with 74.6 per cent and 81.10 per cent, respectively.
LIC is also the largest asset manager in India. As on March 31, 2021, its assets under management (AUM; comprising policyholders’ investments, shareholders’ investments and assets held to cover linked liabilities) were approximately Rs 36.7 trillion on a standalone basis. This is almost equal to the total assets managed by the entire mutual fund industry, which stands at Rs37.91 trillion as on December 2021.
