LIC fixes price band at Rs. 902-949 for its IPO

LIC had a market share of 61.6% in terms of premiums or GWP, 61.4% in terms of new business premium, 71.8% in terms of number of individual policies issued, and 88.8% in terms of number of group policies issued, for the nine months ended December 31 as per the Crisil report

Mumbai: The country's life insurance behemoth, Life Insurance Corporation of India (LIC) has fixed the price band at Rs 902 to Rs 949 per equity share for its maiden public offer. Of course, it is going to be the largest IPO in the country until now.

The initial public offering (IPO) of the corporation will open on Wednesday, May 04 for subscription and close on May 09. Investors can bid for a minimum of 15 equity shares and in multiples of 15 equity shares thereafter, the corporation said in a statement.

The IPO is through an offer-for-sale (OFS) of up to 221,374,920 equity shares by the President of India, acting through the Ministry of Finance, Government of India (selling shareholder). The offer includes a reservation for eligible employees and eligible policyholders.

Addressing the media here today, DIPAM secretary, Tuhin Kanta Pandey said, "The size of LIC IPO was sufficient keeping in view the prevailing market scenario." He hoped that the retail investors will evince good interest in the LIC IPO.

LIC had a market share of 61.6 per cent in terms of premiums or GWP, 61.4 per cent in terms of New Business Premium (or NBP), 71.8 per cent in terms of number of individual policies issued, and 88.8 per cent in terms of number of group policies issued, for the nine months ended December 31 as per the Crisil report.

MR Kumar, LIC chairman said, "It gives me a great pleasure to inform that finally LIC IPO is happening."

Talking about the Sebi's permission to allow government to dilute its stake in the Corporation from 5 per cent earlier to 3.5 per cent, he said that it is a welcome step in view of the ongoing global geo-political situations which has made the market volatile.

LIC was formed by merging and nationalizing 245 private life insurance companies in India on September 1, 1956, with an initial capital of Rs 50 million. LIC is the fifth largest life insurer globally by GWP and the largest asset manager in the country as at December 31, 2021, with an established track record of financial performance and profitable growth. As at December 31, 2021, the Corporation covered 91 per cent of all districts in India and had the largest individual agency network among life insurance entities in India, comprising approximately 1.33 million individual agents.

He informed that it was during February-March period that the corporation gained market share.

LIC's individual product portfolio in India comprises 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits. LIC's group product

portfolio in India comprises 11 group products. Customers in the age bracket 27 to 40 years old accounted for approximately 42 per cent and 42 per cent of individual policies sold in Fiscal 2021 and the nine months ended December 31, respectively.

In reply to a query, Kumar said that as of now 2 crore LIC policyholders have already got their policies linked with Aadhar card. He also informed that LIC's premium in term policy was the lowest among peers and LIC will focus on protection policies in future.

LIC's omni-channel distribution platform for individual products currently comprises individual agents, bancassurance partners, alternate channels (corporate digital sales, micro insurance agents and) point of sales persons – Life Insurance.

LIC and the selling shareholder may, in consultation with the book running lead managers to the offer, consider participation by anchor investors in accordance with the Sebi ICDR regulations, whose participation shall be one working day prior to the bid/offer opening date, May 02.

The offer is being made through the book building process, wherein not more than 50 per cent of the net offer shall be available for allocation to qualified institutional buyers, not less than 15 per cent of the net offer shall be available for allocation to non-institutional bidders and not less than 35 per cent of the net offer shall be available for allocation to retail individual bidders.

The offer includes a reservation of 0.025 per cent of the post-offer paid up equity share capital for eligible employees and 0.35 per cent of the post-offer paid-up equity share capital for eligible policyholders.

Commenting on LIC IPO, Varun Sridhar, CEO - Paytm Money, says, "With the LIC IPO coming up, we believe that May will be a record month for demat account openings in recent times. It is a milestone event for Indian capital markets and is expected to bring millions of new investors."

We at Paytm Money are excited for this opportunity as we have built one of the most robust and comprehensive trading and investment platforms in the country. More importantly, given the trust that LIC has built with the common man over the decades, a lot of these investors are expected to come from tier 2 & 3 towns. Our IPO product will allow these new retail and HNI investors to apply for the IPOs on the Paytm Money and Paytm app in a breeze, he added.