How Profitable is it to Apply for a LIC IPO? 

Finance

Apply for LIC IPO is India’s biggest life insurer with 286 million policies, 115000 employees, 1.34 agents, and more than 2000 branches. LIC has a 64.1% market share in terms of premium and a 55.2% market share in terms of a new business premium. LIC manages around $528 billion of assets, more than the total size of India’s mutual fund industry and 3.3 times more than the total assets under the management of all 23 private life insurance companies.

LIC’s worldwide domination is unrivaled, with no other life insurance company in any country having such a significant market share. LIC is ranked fifth in the world regarding life insurance premiums and tenth in terms of total assets. Moreover, it is the only Indian insurer in the top 10 global insurers.

Why is LIC Coming Out With a Public Offering? 

In recent years, the government has struggled to reach its disinvestment goals. For various reasons, including COVID-19, the divestment of Air India and BPCL has been postponed, although it may get completed this fiscal year. For FY22, the government has set an ambitious disinvestment target of &1.75 lakh crore.

This ambition will be aided by a successful LIC IPO, in which the government will sell a significant interest. While no specific date has been set, the listing of LIC is scheduled to take place in the third or fourth quarters of 2021-22.

Why Should Investors Look Forward to the LIC IPO?  

With a total first-year premium of over 1.844 lakh crore in the fiscal year ending March 2021, LIC is India’s largest life insurer. It owns more than 66 percent of the market. In addition, LIC is India’s largest institutional investor, with a sizable investment portfolio.

It has a large employment base with 2.9 lakh workers and a network of 22.78 lakh agents. There is fair anticipation of a successful listing, given the success of previous PSU IPOs such as IRCTC. The introduction of the policyholder category is undoubtedly a positive event for retail investors.

Benefits of LIC IPO Investing 

Get in on the Action Early 

By investing in the LIC IPO, you can enter the company’s ground floor with high growth potential. As LIC is the biggest insurer, it will provide a quick profit in a short period. However, it may also help to grow wealth in the long term.

Meet Long-term Goals 

IPO investments are equity investments. And hence they have the potential to bring significant returns in the long term. Therefore, it can help you to fulfill your long-term financial goals.

More Price Transparency 

The price per security issued will get mentioned in the LIC IPO order document. So you will have access to the same information as more prominent investors.

Policyholder Discount 

LIC and the Indian government decided to offer a discount to eligible policyholders.

How Much Could the Centre Mop-up via the IPO 

The LIC IPO might bring in up to Rs. 21 lakh crore. While the LIC Act of 1956 got changed to facilitate the listing. No information on the number of shares on sale or the price band has been released. The amendments allow the LIC’s approved share capital to be increased to 725,000 crores, split into 2,500 crores *10 shares.

Benefits of Being a Shareholder

To apply for the LIC IPO as a policyholder, they must update their PAN details on the LIC portal and open a Demat account. LIC has reserved 10% of the issue size for its policyholders and has also planned to discount such investors in the IPO. Therefore, policyholders will have the opportunity to apply for the LIC IPO separately in the said category, over and above retail application. It would increase the policyholder’s chances of getting an allotment in the offering.

How to Apply for the LIC IPO? 

It is necessary for the bidder to have a Demat account, a way through which the individuals hold stock market shares and other securities. Therefore, those who want to apply for the LIC IPO should get a Demat account of their own.

Any company’s initial public offering (IPO) is a momentous occasion. It obtains the necessary funds, and its equity shares are accessible for public trade. It is also advantageous to both the firm and the investors.