LIC Files DRHP With SEBI for Mega IPO

Life Insurance Corporation of India (LIC) filed its Initial Public Offerings (IPO) papers with the Securities and Exchange Board of India (SEBI).

Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey tweeted this information.

For filing the valuation of about Rs 31.6 crore shares are on offer representing 5 per cent equity of LIC. The face value of the equity shares is Rs 10.

According to DIPAM Secretary, the IPO is 100 per cent OFS by the Government of India and no fresh issue of shares by LIC. LIC has a 66 per cent market share in New Business Premiums with 283 million policies and 1.35 million agents as of March 31, 2021. The embedded value of LIC as on September 30, 2021, is Rs 5,39,686 crore (about INR 5.4 trillion).

According to the draft red herring prospectus (DRHP), the offer has been authorized by the resolution of the LIC Board dated February 11, 2022. The Selling Shareholder, through its letter dated February 11, 2022, conveyed its approval for the Offer for Sale of up to 316,249,885 Equity Shares.

The Employee Reservation Portion shall not exceed 5.00 per cent of our post-Offer Equity Share capital. The Policyholder Reservation Portion shall not exceed 10.00 per cent of the Offer size. IDBI Bank is the subsidiary of LIC with effect from January 2019, following the acquisition of 51 per cent shareholding in IDBI Bank.

Kotak Mahindra Capital Company Limited, Axis Capital Limited, BofA Securities India Limited, Citigroup Global Markets India Private Limited, and Nomura Financial Advisory and Securities (India) Private Limited are the lead managers for this much-awaited IPO of LIC.

As per CRISIL Report, LIC has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 64.1 per cent market share in terms of premium, a 66.2 per cent market share in terms of new business premium, a 74.6 per cent market share in terms of the number of individual policies issued, a 81.1 per cent market share in terms of the number of group policies issued for the Fiscal Year 2021, as well as by the number of individual agents, which comprised 55 per cent of all individual agents in India as at March 31, 2021.

As per the CRISIL report, there are currently 24 life insurance companies in India, with LIC being the sole public player. The size of the Indian life insurance industry was Rs 6.2 trillion on a total-premium basis in Fiscal Year 2021, up from Rs 5.7 trillion in Fiscal 2020. The industry's total premium has grown at 11 per cent CAGR in the five years ended Fiscal 2021. CRISIL Research forecasts the industry's total premium to grow at 14-15 per cent CAGR over the next five years, to reach close to Rs 12.4 trillion by the Fiscal Year 2026.