India’s Largest Life Insurance Company Files For The Nation’s Largest Initial Public Offering.

The capital markets regulator SEBI has approved the Life Insurance Corporation of India’s (LIC) draft share sale prospectus, opening the way for India’s largest initial public offering (IPO). After listing on the stock exchanges, it’s also possible that LIC may overtake Reliance Industries Ltd as India’s most valuable listed business.

The draft red herring prospectus was filed with SEBI (Securities and Exchange Board of India).LIC proposes to sell 316.25 million shares or nearly 5% of its overall stock base.

The IPO is structured as a full offer for sale, implying that all proceeds will go to the government to assist it in meeting its disinvestment goals. The government had estimated disinvestment receipts for this fiscal year at 780 billion dollars in the Union Budget, delivered earlier this month.

According to the offer agreement, employees will be entitled to a portion of the shares not exceeding 5% of the total offer. A part of the proceeds, not to exceed 10%, will be set aside for qualified policyholders. As of the draught red herring prospectus date, these are Indian nationals with LIC policies.

The Valuation:

Currently, private life insurance businesses are trading at two to four times their intrinsic worth. Based on the same criterion, LIC’s market capitalization might range between 10,800 to 21,600 billion dollars. With a market capitalization of 16,100 billion dollars, Reliance Industries Ltd is now the most valuable company in India.

Even at a 10,800 Billion dollars valuation, a 5% sale would yield the government 540 billion dollars. This will be nearly three times the 183 billion dollars raised by One 97 Communications Ltd (Paytm’s parent company) in its first public offering last year.

About LIC:

The Life Insurance Corporation of India (LIC of India) is a major life insurance firm based in Mumbai. With an asset value of about 25,293 Billion dollars, LIC is India’s largest life insurance company. LIC was established on September 1, 1956, when the Indian government passed the Life Insurance Corporation of India Act, nationalizing the country’s private insurance market.

LIC of India currently has 1,537,064 individual agents, 342 corporate agents, 109 referral agents, 114 brokers, and 42 banks as part of its network. With its head office in Mumbai, LIC has 2,048 computerized branch offices, 113 divisional offices, 1,381 satellite offices, and eight zonal offices.

The Life Insurance Corporation of India aims to improve people’s quality of life by offering financial products and services with competitive returns.

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Kshitij does business research and content writing for VCBay. Pursuing BBA from Symbiosis Center Of Management Studies (SCMS) Pune, he is skilled in Financial Modeling, Stock valuation and Microsoft Excel. He is passionate about Entrepreneurship and Finance.


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