Life Insurance Corporation India’s IPO can become the biggest IPO of India and investors are eagerly waiting for it, so let’s discuss today about the latest updates and status of LIC IPO and on which path it is on.
Life Insurance Corporation of India (LIC)
LIC was founded on September 1, 1956 with nationalization of insurance industry in India. Around 245 insurance companies and societies were merged at that time to form LIC.
As on May’2020 LIC operates with 2048 branches, 113 divisional offices, 8 zonal offices, 1381 satellite offices and the corporate office.
Interesting facts about LIC and LIC IPO
- Present Chairman of LIC is Mr. M.R Kumar.
- LIC have around 29 Cr policyholders.
- In 2018-19 LIC have settled 26 million claims.
- LIC have earned Total Premium Income of ₹ 337,185 Cr in 2018-19 vs ₹ 317,851 Cr in 2017-18.
- LIC contributes to around 7% of India’s GDP.
- LIC have 11,79,229 agents as on 31.03.2019.
- In FY 20 end total investments in equity (gross) of LIC in market is expected to be around Rs. 72,000 Cr., while in 2019 it was Rs. 68,620 Cr., and it was Rs. 58,890 Cr in 2018.
- In February 2020 government has announced their plans for disinvestment in LIC with an aim to generate Rs. 90,000 Cr. with its public issue.
- Every year, the life insurer books a profit of Rs 18,000 Cr. to Rs 25,000 Cr. in equity profits alone. In FY19, LIC had an equity profit booking of around Rs 23,600 Cr.
- LIC owns 51% stake in IDBI Bank.
- At the end of October 2019, LIC held a market share of 70.9% while private insurers held 29.1% based on the new premium collection.
- IF IPO comes LIC could turn out to be India’s most valued company.
As per experts opinion listing of LIC will improve the accountability and transparency in LIC. However, LIC IPO will not be a easy task and have various procedural and legal bottlenecks including amendment of LIC Act, independent valuations, obtaining regulatory approvals etc. Which may get the IPO delayed from government deadline of March 2021.
Government in 2018 also announced merger of three other insurance giants – National Insurance co, Oriental Insurance and United India Insurance and later on listing of same but this announcement is not yet materialised and is delayed almost a year.
If listed LIC will be subject to stringent disclosures and compliance by the securities and exchange board of India and there will be better corporate governance and better disclosure.
Insurance watchdog IRDAI is yet to get any proposal from life insurance behemoth LIC on an initial public offering they said “LIC proposal has not yet come”, Government is expected to set up a panel to clear initial issues of listing shortly. However, Macquarie and other believe the IPO to get delayed and unlikely to come in FY 21 due to several operational and legal challenges. They are also working on restructuring plans if required to be carried out by the government.
LIC IPO : On 20th Jun’ 2020 LIC unions urge FM Sitharaman not to divest
On Saturday, three unions of LIC representing Class III employees, field workers, representing officers in a letter said – The move to sell equity of the insurer will impact the economy and vulnerable sections of the Indian people, they said in a letter to FM Nirmala Sitharaman.
They requested her to withdraw invitation of bids for appointing pre-Transaction advisors for LIC`s initial public offering (IPO) and reconsider the decision of disinvestment in LIC.
Department of Investment and Public Asset Management (DIPAM) issued a request for proposal (RFP) for engagement of Pre-transaction advisors for LIC IPO assistance.
Ealier FM Sitharaman replied to such letters of unions : “Our arguments against the equity sale are not on any partisan interests but are based on the interests of the national economy and the Indian society.”
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