SBI Life weighs option to invest in LIC IPO

However, how much they will invest was not yet clear for a simple reason that the finer details about the size of LIC IPO was not yet clear

Mumbai: The peers of LIC, like SBI Life, are also watching the forthcoming LIC IPO as they weigh their option to invest into it. However, how much they will invest was not yet clear for a simple reason that the finer details about the size of LIC IPO was not yet clear. As of now, only three life insurers are listed entities which include ICICI Prudential, HDFC Life and SBI Life.

Talking to Bizz Buzz, Subhendu Kumar Bal, President, Institute of Actuaries of India and Chief Actuary & Chief Risk Officer, SBI Life Insurance Company said, "There are positives and negatives that I see from my side at least, if I took myself and LIC. LIC is already a top government in this line so that will really increase the understanding of the insurance sector to the public soul. So I will take this as a good positive for everybody as three companies are already listed from the life insurance side SBI Life Insurance, ICICI Prudential life insurance and HDFC life insurance. So, with this LIC coming with IPO, most companies are coming with IPO or listing, then the transparency of the report would be increased, at least amongst the listed companies. The investors and the public will get the proper information and that is also a very big positive point for the side and second part as you said that it will be very good transparency as far as the market information is concerned."

"As far as the negative part of this thing is concerned, LIC is a very big customer-based identity. As I was having around 28 years of career in life insurance, I started my life with LIC only. So, the biggest problem I would not say problem, but the toughest or complex part is, the assessment of the real estate values of LIC,", he said.

Bal further said that "Also there is a huge database to be valued. So, let me give an example to explain better what I want to say - LIC has a lot of property and housing properties, real estate though if you see the places you may be surprised to know that they may be getting only few hundred rupees or few thousands as rental income, which is required to be assessed about what is the price of that particular real estate property? The very simple example so understanding the overall asset value to that extent well maybe a little tough, I am not saying anything else but it may be a little tough to assess the actual extent of the real estate sector or to compile the huge database."

Asked if SBI Life will participate in LIC IPO, he replied, "I would definitely like to see how the price is coming, then only it can be valued at that point of time, generally when an IPO comes to people with a lot of positives and negatives, so people should come and look at that point of time based on their prospectus, based on everything, people will participate.'

Earlier, Mahesh Sharma, MD & CEO, SBI Life had said, "We currently have only three listed life insurance players in India, so the government's decision of going ahead with the listing of LIC is a welcome move, it will aid further transparency and add more depth for the insurance sector in the equity markets." As of now, the government is the owner of LIC and through disinvestment, it plans to shed its 10 per cent stake in the life insurance behemoth which may fetch it around Rs 1,00,000 crore.