LIC IPO Likely To Hit Market In End Of April

Synopsis: According to reports, the Government is taking the step considering the factors that instability in the market has reduced, and more importantly, the market of life insurance stays unaffected by other global factors, for example, oil prices, and rising prices of raw materials, and the war.

After being delayed for several reasons including geopolitics, India’s biggest life insurer Life Insurance Corporation (LIC) is finally expected to launch the Initial Public Offering (IPO), reportedly by the end of April month. Reports suggest that the valuation would also be revised by the Government.

Earlier, LIC IPO was supposed to hit the market in the month of March which could not happen due to the ongoing circumstance leading to adverse anticipations. Notedly, the Government will also revise the valuation this time which will be Rs 11 lakh crore this time, comparatively lesser than earlier once which was Rs 16 lakh crore.

As mentioned by the Government-owned insurer on its website, its net profit has grown to Rs 235 crore in the third quarter. Going further it mentions its net profit of Rs 1,643 crore in the nine-month profit period that ended in December.

Apparently, LIC IPO is the part of Government’s disinvestment plan from the state-owned life insurer. The Government has aimed to raise $12 billion through the process in the Union Budget 2022. The Government, later on, revised the target to Rs 65,000 crore.

What is Life Insurance Corporation or LIC?

Established on September 1, 1956, through the Life Insurance of India Act 1956, LIC or Life Insurance Corporation is India's statutory insurance and investment corporation. Earlier LIC had a monopoly in soliciting and selling the life insurance sector in India until liberalization was introduced for the sector, allowing private players to enter the market.

According to reports, the Government is taking the step considering the factors that instability in the market has reduced, and more importantly, the market of life insurance stays unaffected by other global factors, for example, oil prices, and rising prices of raw materials, and the war.

LIC in its filing with the Securities and Exchange Board of India (SEBI) on February 13, had mentioned the objectives of the offerings stating, “The objects of the Offer are to (i) achieve the benefits of listing the Equity Shares on the Stock Exchanges; and (ii) carry out the Offer for Sale of up to 316,249,885 Equity Shares by the Selling Shareholder.”

In total, the selling shareholder (President of India acting through the Ministry of Finance, Government of India) is offering over 316,249,885 shares. Right now, the Indian Government owns the whole shares in the country’s biggest public-life insurer.

What is an IPO?

An IPO or Initial Public Offering is a process using which a company (private or government) offers its shares to the public or investor (new) in order to raise funds and to do so, the company has to be listed on the stock exchange.
During the process of an IPO, the company is mandated to file the documents with the Securities and Exchange Board of India (SEBI). The documents carry the information related to the company, the promoters of the company, projects, financial details, objectives behind the fundraising, etc.