New Delhi: LIC IPO The pricing is very attractive and investors can look forward to the returns in the coming years as the company has growth potential, LIC Chairman MR Kumar said this on Friday.
The value of new business (VNB) should move higher than the embedded value, and it should reach 12-13 in future, he said in an interview with PTI here.
He added that VNB margin is what investors will be looking for and currently it is 9 for LIC.
When asked whether there is enough money on the table, he said, “It is based on market sentiment. LIC is starting with low VNB and has the potential to grow.”
VNB is the present value of expected future earnings from new policies written during a specified period. It refers to the added value to be generated through the writing of new policies during a specified period.
At these price levels, the LIC IPO is valued at 1.11 times its embedded value, compared to China Insurance’s 0.21 or Ping An Insurance’s 0.54.
When pointed out that the previous listings of two insurance firms – New India Assurance and GIC Re – have not generated returns for investors, Kumar said they are in separate businesses and margins are very low.
The issue price of New India Assurance was Rs 800 per share while it was Rs 912 per unit for GIC Re. Although their shares are trading at Rs 119.15 and Rs 130.15 respectively.
These two public sector insurance companies were listed in 2017.
Defending the reduction of LIC’s IPO size to 3.5 per cent from the earlier 5 per cent, he said it is the right size considering the capital market environment and expected significant retail participation in one of the most valuable corporations in India .
LIC’s IPO is going to be the largest ever initial public offering in the country, despite the small size of around Rs 20,557 crore.
So far, the amount raised from Paytm’s IPO in 2021 was the largest at Rs 18,300 crore, followed by Coal India (2010) at around Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
In February, the government had planned to sell 5 per cent stake in the company.
LIC has fixed a price band of Rs 902-949 per equity share for the issue. The share sale is through an offer-for-sale (OFS) of 22.13 crore equity shares and will open on May 4 and close on May 9. The shares are likely to be listed on May 17.
The offer includes reservation for eligible employees and policyholders. Retail investors and eligible employees will get a discount of Rs 45 per equity share and policyholders will get a discount of Rs 60 per equity share.
LIC was formed on September 1, 1956 by merging and nationalizing 245 private life insurance companies with an initial capital of Rs 5 crore.
Its product portfolio includes 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits. The group product portfolio of the insurer comprises 11 products of the group.
As of December 2021, LIC had a market share of 61.6 per cent in terms of premium or GWP, 61.4 per cent in terms of new business premiums, 71.8 per cent in terms of number of individual policies issued and 88.8 per cent. Number of group policies issued.
The value of new business (VNB) should move higher than the embedded value, and it should reach 12-13 in future, he said in an interview with PTI here.
He added that VNB margin is what investors will be looking for and currently it is 9 for LIC.
When asked whether there is enough money on the table, he said, “It is based on market sentiment. LIC is starting with low VNB and has the potential to grow.”
VNB is the present value of expected future earnings from new policies written during a specified period. It refers to the added value to be generated through the writing of new policies during a specified period.
At these price levels, the LIC IPO is valued at 1.11 times its embedded value, compared to China Insurance’s 0.21 or Ping An Insurance’s 0.54.
When pointed out that the previous listings of two insurance firms – New India Assurance and GIC Re – have not generated returns for investors, Kumar said they are in separate businesses and margins are very low.
The issue price of New India Assurance was Rs 800 per share while it was Rs 912 per unit for GIC Re. Although their shares are trading at Rs 119.15 and Rs 130.15 respectively.
These two public sector insurance companies were listed in 2017.
Defending the reduction of LIC’s IPO size to 3.5 per cent from the earlier 5 per cent, he said it is the right size considering the capital market environment and expected significant retail participation in one of the most valuable corporations in India .
LIC’s IPO is going to be the largest ever initial public offering in the country, despite the small size of around Rs 20,557 crore.
So far, the amount raised from Paytm’s IPO in 2021 was the largest at Rs 18,300 crore, followed by Coal India (2010) at around Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
In February, the government had planned to sell 5 per cent stake in the company.
LIC has fixed a price band of Rs 902-949 per equity share for the issue. The share sale is through an offer-for-sale (OFS) of 22.13 crore equity shares and will open on May 4 and close on May 9. The shares are likely to be listed on May 17.
The offer includes reservation for eligible employees and policyholders. Retail investors and eligible employees will get a discount of Rs 45 per equity share and policyholders will get a discount of Rs 60 per equity share.
LIC was formed on September 1, 1956 by merging and nationalizing 245 private life insurance companies with an initial capital of Rs 5 crore.
Its product portfolio includes 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits. The group product portfolio of the insurer comprises 11 products of the group.
As of December 2021, LIC had a market share of 61.6 per cent in terms of premium or GWP, 61.4 per cent in terms of new business premiums, 71.8 per cent in terms of number of individual policies issued and 88.8 per cent. Number of group policies issued.