LIC | Preparation of largest IPO

 

The IPO of Life Insurance Corporation of India (LIC), the largest life insurance company in the country, is likely to come in this financial year. It is the largest IPO in the country. Also, in the near time, only the possibility of Jio or Reliance Retail as such a big IPO is visible. In such a situation, all eyes are on this IPO. Its market capitalization can overtake companies like Reliance Industries, HDFC Bank, TCS. Based on its current asset under management and business premium, its valuation will be more than Rs 8-10 lakh crore. LIC has a market share of 75 per cent in terms of policy with assets of Rs 31 lakh crore. It has a 66 per cent stake in First Year Premium. LIC is also India's largest institutional investor company. After the listing, LIC will be the most valuable listed company in the country. It will also attract foreign investors.

 

The annual report of LIC shows that its total premium in the calendar year 2019 has been Rs 3 lakh 79 thousand 400 crores. If you look at the premium of the entire life insurance sector of Canada, then it has been 3.70 lakh crores. Similarly, the total number of policies issued by private life insurance companies in India is 70 lakhs while the number of policies issued by LIC is 2.19 crore. The number of LIC agents is 1.2 million, which is more than the total population of countries like Fiji and Bhutan. Its reach network is from Kashmir to Kanyakumari. The total investment of LIC is Rs 29 lakh 19 thousand 478 crores, while the total AUM of 45 mutual funds in the country is less than that which is Rs 27.28 lakh crore. The total number of branches of LIC is 6,500 while that of HDFC, the largest private sector bank in the country, has 5,416 branches.

 

If we look at the Coal India IPO in the biggest IPO to date, the retail share was 2.1 times in it. It was an IPO of 15 thousand crores. LIC will raise 80 thousand crore rupees and if it is considered as a 35 per cent share of retail, then about 25 to 28 thousand crores will go to retail share. This would be two and a half times the retail portion of Coal India's IPO. 

 

The listing of LIC may change the weightage of the country's stock market in a big way in the global equity markets. The government may see the participation of retail investors on a large scale in this IPO. It will issue shares to employees and unitholders. This share will be at a discount and because of this new investors will come in the market. It is estimated that 200 million new Demat accounts can be opened. It has about 1.25 lakh employees. It has a total of 32 crore policies. This suggests that its IPO may increase at least 40 million retail Demat accounts.