The state-owned insurance group and investment company, Life Insurance Corporation of India (LIC), last week filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India ( Sebi) to raise funds through an initial public offering (IPO). The IPO consists of an offer for sale of up to 316.25 million shares by the Indian government. LIC’s IPO is likely to be India’s largest IPO to date.

LIC IPO: when will it happen?

The initial public offering of more than 31.6 crores of shares, or 5% of the government’s stake, is expected to hit D Street in March and the insurance giant’s employees and policyholders would benefit from a discount by compared to the floor price.

LIC’s IPO: what’s in it for policyholders?

According to the prospectus, employees and policyholders of the country’s largest insurer will receive a discount from the floor price. The share that is planned to be reserved for the insured can go up to a maximum of 10%. “Total reservations for eligible policyholders must not exceed 10% of the offer size,” the DRHP said. The employee quota will be capped at 5%.

LIC IPO: which policyholders are eligible?

To invest in LIC’s highly anticipated IPO, policyholders must have two things: the policyholder’s PAN must be updated on the LIC portal, the policyholder must have a demat account.

LIC IPO: Discounts for policyholders

The potential discount amount will be specified closer to the bid opening date, at least two working days before. The quota of policyholders in the IPO – a first of its kind – was created after the central government allowed LIC to designate policyholders as one of the reserved categories, in accordance with an amendment made last year to the LIC Act of 1956.

LIC IPO: how can policyholders verify PAN-LIC status?

  • Visit https://linkpan.licindia.in/UIDSeedingWebApp/getPolicyPANStatus
  • Enter the policy number, date of birth and PAN information, along with the captcha. Then press the Submit button.

LIC IPO: How to PAN Link Policy Number

Policyholders can link their policies to their PAN through the online method. However, policyholders who are not tech-savvy can ask their agents to do it for them.

IPO of LIC: market share

LIC holds a majority share of the life insurance market in India. The government, which hopes to raise up to $12 billion from the sale of a stake in the IPO, expects the proceeds to help it close a shortfall this fiscal year.

LIC is not only the largest in the world in terms of domestic market share with over 64.1% of total gross written premiums in 2020, but also the one with the highest return on equity at 82% , in addition to being the third largest in terms of life insurance premium, according to a Crisil report.

LIC IPO: Finance

LIC reported an after-tax profit of Rs 1,437 crore for the first half of the 2021-22 financial year, compared to Rs 6.14 crore a year ago. Its new business premium growth rate was 554.1% in the first half of FY22, compared to 394.76% in the corresponding period of the prior year.

LIC IPO: Intrinsic Value

According to the DRHP, the intrinsic value was set at Rs 5.39 trillion. Usually, companies trade at around 3-4x EV.

LIC IPO: How many shares is the government selling?

The government announced that it would sell 5 percent of the total capital in the form of shares. Thus, he will retain a 95% stake in the company.

LIC was established on September 1, 1956 through the merger and nationalization of 245 life insurance companies in India, with an initial capital of Rs 5 crore. Even though many private life insurers have arrived on the scene, LIC continues to be the dominant life insurer.

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