The LIC IPO, India’s largest Initial Public Offering, will go public on May 4, 2022. The Rs 20,557 crore LIC issuance would be open for subscription from May 04, 2022, to May 09, 2022, at a price range of Rs 902 to Rs 949 per equity share. The lot size for the LIC IPO is 15 shares. Furthermore, LIC policyholders, employees, and retail investors receive a discount of Rs 60 per share on the real offer price.
The LIC IPO is an Offer For Sale (OFS) in which the government sells a 3.5 per cent share in the corporation. The government has placed the LIC’s worth at Rs 6 lakh crore. A 3.5 per cent equity sale at this valuation will net the government roughly Rs 21,000 crore.
On May 2, 2022, LIC raised Rs 5,627 crore from anchor investors. Domestic mutual funds made up roughly 71% of the anchor investor part. Retail investors will receive 35% of the total shares in the offer, according to LIC. Furthermore, under the policyholder’s quota, LIC has reserved 10% of the equity shares.
In the IPO, LIC will issue a total of 22.13 crore equity shares. In the IPO, it has allocated around Rs 8,500 crore in shares for retail investors, workers, and policyholders. Retail investors, for example, are non-professional individual investors with a maximum bid of Rs 2 lakh.
A retail investor who is also a LIC policyholder can apply under both categories, with a maximum limit of Rs 4 Lakh. Furthermore, a retail investor who is an existing LIC employee and a policyholder can apply under all three categories up to Rs 6 lakh.
In metropolitan regions, LIC faces stiff competition from private life insurance companies. It has lower short-term persistency ratios, which might have an influence on the insurer’s financial situation.
Furthermore, financial markets were turbulent during the Russia-Ukraine crisis, and the RBI may shortly raise interest rates. Private life insurers are gaining market share from LIC. Furthermore, decreasing revenue growth and profitability, as well as declining Value of New Business (VBN) margins, are major issues.
Investors interested in long-term life insurance investments might consider the LIC IPO. Furthermore, LIC tackles worries about the declining market share by emphasising up-selling and cross-selling of life insurance products, creating life insurance products for millennials, and offering protection-based products such as term life insurance.
With stable margins and a well-diversified product portfolio, LIC is a reliable competitor in the life insurance industry. Furthermore, as the fear of a pandemic increases demand for life insurance, LIC will soon focus on regaining market dominance. Because LIC is valued at a significant discount to its listed counterparts, retail investors may be interested in investing in the LIC IPO. Furthermore, it will address concerns about India’s largest life insurer’s continuously declining market share.