Positive buzz in the air about LIC IPO, says FM Sitharaman

Addressing a media briefing after the Reserve Bank of India (RBI) board meeting, Sitharaman said, “I can see after the announcement, welcome, there is a buzz in the air.”

According to the DRHP (Draft Red Herring Prospectus), the public issue is an offer for outright sale where the government will sell 5% stake or 31.6 crore shares in the insurance sector. No fresh stock will be issued for the IPO. The government holds 100% stake or more than 632.49 crore shares in LIC. The face value of the shares is 10 per.

However, the government did not disclose the market valuation of LIC in DRHP or the discounts given to policyholders or LIC employees in the public offering.

Despite the steady decline in market share, LIC continues to lead the life insurance market with 64 per cent in the country of 1.4 billion people.

As per the draft red herring prospectus, the embedded value of LIC, which is a measure of the value of consolidated shareholders in an insurance company, is pegged at approx. 5.4 lakh crore by international actuarial firm Milliman Advisors till September 30, 2021.

With a staff of over 100,000 people, its vast assets under management 36.7 trillion ($491 billion) is equivalent to about 16% of India’s GDP.

LIC in turn is one of India’s largest institutional investors, with significant stake in Indian blue-chip stocks such as Reliance, TCS, Infosys and ITC.

As per the draft papers, LIC has reported the benefits of 1,437 crore for the first half of the financial year 2021-22 as compared to 6.14 crore in the year-ago period. Its new business premium growth rate stood at 554.1% during the same period, as against 394.76% in the same period last year.

Investors and analysts are gearing up for the LIC IPO, which could hit the markets in March, and will join top listed companies like Reliance Industries Limited (RIL) and Tata Consultancy Services (TCS) once the market cap is listed. could.