LIC IPO
LIC is a statutory Insurance and investment corporation incorporated in 1956 and is headquartered in Mumbai. It is a government-owned company in India. Since its inception, LIC has been selling and soliciting life insurance, and it is India’s largest life insurer by Gross Written Premium.
India’s most extensive public offering is set to hit the market as Life Insurance Corporation of India. As an insurer company, LIC holds the top position in India that has a market share of 69% in FY20. The significant stakes in LIC are regulated by the Indian government, about 95%, and are worth Rs 34 trillion.
Advantages of the LIC IPO
- LIC being a top company in the insurance industry, will give a chance to the individual investors to build corpus with LIC.
- With LIC IPO, the operations and governance of insurers will become more transparent.
- The IPO launch will attract many retail investors and foreign as well.
- As the government has decided only to sell 10% of the stakes, it allows the Indian government to retain complete control over the operations.
Things to Consider About LIC IPO
LIC IPO Date
The IPO launch slowed down due to the pandemic, but during the financial budget of 2021, it got announced that LIC would launch an IPO in 2021. As a result, the IPO of over 31.6 crore shares of 5% of the government stake may hit in March. Employees insurance policyholders would get a discount over the floor price.
LIC IPO Price
There are no speculations of the price yet as such. The price will be determined by the value and share price supplied by the insurance market’s rivals. When the issue becomes available for a public subscription one week prior, the issue pricing will be revealed.
LIC IPO Size
The Indian government will not sell more than 10%of its stake in LIC. However, many financial experts estimated that the valuation would go up to Rs 8-11 Lakh Crores.
LIC IPO Valuation
As mentioned above, the valuation of LIC can be between Rs 8-11 Lakh Crores. However, nothing official as of now has been declared.
LIC IPO Allotment and Listing
The Indian government has plans for LIC policyholders, and there is news that 10% of the shares will be reserved for them. Before the IPO launch, around 1 Crore Demat Account will be opened as many of the LIC policyholders don’t have a Demat Account. You will get all the information related to sharing allotment in the LIC IPO.
How to Apply for a LIC IPO?
Like any other IPO, investors can apply for the IPO through any stockbroking firm or a bank with ASBA service.
Policyholders planning to invest in LIC’s IPO must ensure that PAN is linked with LIC. In addition, policyholders must also have a Demat account to invest in LIC’s IPO.
On the IIFL Securities website, you may subscribe to the LIC IPO. You’ll learn everything there is to know about impending IPOs. You may also keep track of ongoing, upcoming, and completed initial public offerings. You may also purchase initial public offerings (IPOs) using the IIFL Trading Terminal (TT) platform. Customers of IIFL Markets can apply for an IPO using the company’s website or the IIFL Markets mobile app. In addition, IIFL provides an online IPO application that is both paperless and hassle-free.
Risk Factors Associated With a LIC IPO
LIC IPO being the biggest IPO of India, the government of India has been encouraging Indian citizens to invest in the same.
Here’s a look at what the risk factors are:
Internal Risk Factor
Adverse Impact due to Brand Name
Because of the increased demand for insurance due to the Covid epidemic, several LIC staff and agents took advantage of the situation under the LIC brand name. As a result, the brand has suffered a significant effect due to wrongdoing and fraud by such persons utilizing the LIC brand name.
Ineffective Risk Management Tools
Due to the inherent limitations in the design and implementation of such a system, including internal control environment, risk identification and evaluation, the effectiveness of risk control, the existing systems may not be adequate in identifying or mitigating the risk exposure in all market environments.
External Risk Factor
Legal Uncertainty
The laws and regulations often change, making it impossible to forecast how any new financial legislation would affect a company, whether global or local.
Risk Related to Equity and Shares
The determination of the price band is based on various factors and assumptions, and the Corporation and the Selling Shareholder will determine it. Therefore the market price of LIC’s equity shares may change due to several factors, and one should consider them before investing.
Conclusion
The LIC is the only government institution that provides insurance services, and it is also the most reputable. The LIC IPO is supposed to turn the market around, supporting growth and development. However, it will also notice a significant quantum oversubscription.
The listing is anticipated to benefit investors and policyholders because the insurance organization would be controlled by SEBI laws following the listing, resulting in increased transparency and efficiency.
The IPO is vital for the economy as a whole. After all of the setbacks caused by COVID-19, the IPO might positively influence. The initial public offering (IPO) is an excellent way to invest their money.