The much-awaited LIC IPO will finally be opening for the subscription. The LIC IPO will open for subscription on May 4th and close on May 9th. Through the IPO, the Government of India is looking to sell a 3.5% stake in the company via an offer for sale of equity shares aggregating up to Rs. 21,000 crores. Making it the largest ever IPO in India.
IPO Details
| Issue Period | 4th May 2022 to 9th May 2022 |
|---|---|
| Price Range | Rs. 902 - 949 |
| Minimum Bid Quantity | 15 and in multiples thereof |
| Finalization of Allotment | 13th May 2022 |
| Initiation of Refunds | 14th May 2022 |
| Credit of Shares | 16th May 2022 |
| Date of Listing | 17th May 2022 |
| Mandate end date | 24th May 2022 |
| Anchor Investors Lock-in End Date | 8th June 2022 |
About the Company:
LIC was incorporated in 1956 after merging and nationalizing 245 private life insurance companies in India. It is the largest life insurer in the country, with a market share of 64% in terms of premiums. 74.6% market share in terms of number of individual policies issued, and 81.1% market share in terms of number of group policies issued for Fiscal 2021.
As of September 30, 2021, LIC operated 8 zonal offices, 113 divisional offices, and more than 4,700 branch/satellite and mini offices.
LIC is the largest asset manager in India with an AUM of Rs. 39.56 lakh crore as of September 30, 2021, on a standalone basis. Which was more than 3.3 times the total AUM of all private life insurance players in India and 18.5% of India’s annualized GDP for Fiscal 2022. LIC is also the biggest player in India’s equity markets, as of September 30, 2021, its investments in listed equity represented around 4% of the total market capitalization of NSE.
Financials
| Financial Year Ended | Revenue (â‚ą Crores) | PAT (â‚ą Crores) | EPS (â‚ą) |
|---|---|---|---|
| March 2019 | 570,809.57 | 2,627.38 | 4.15 |
| March 2020 | 645,605.47 | 2,710.48 | 4.29 |
| March 2021 | 703,709.45 | 2,974.14 | 4.7 |
| Period ended September 30, 2021 | 336,972.92 | 1504.01 | 2.38 |
For more information, you can check the IPO Prospectus filed by the company.
Policyholders quota
The IPO will also have 10% of the issue size reserved for the policyholders. You can check out more on the policyholder’s quota in this post.
Some interesting bits from the DRHP:
LIC has the largest network of agents in India. As of March 31, 2021, LIC had 1.35 million individuals in its agent network compared to 1.10 million individuals for the entire private life insurance industry.
| FY21 | Number of Individual Agents In India (As of March 31, 2021) |
|---|---|
| LIC | 1,353,808 |
| SBI Life | 170,096 |
| HDFC Life | 112,012 |
| ICICI Prudential Life | 187,560 |
| Max Life | 55,217 |
| Bajaj Allianz Life | 88,102 |
| Median of Top 5 private players | 112,012 |
LIC also generates a major portion of its premium through individual agents, contributing approximately 94% of its NBP in Fiscal 2021. In Fiscal 2019, Fiscal 2020, Fiscal 2021, and the six months ended September 30, 2021, individual agents were responsible for sourcing 96.69%, 95.73%, 94.78%, and 96.42% of LIC’s new business profit for its individual products in India.
Growth of the life insurance industry over the years. Until 2000, LIC was the only player in the life insurance segment, this changed after the government allowed FDI in the sector.
Life insurance premiums have grown at an 11% CAGR from Fiscals 2016 to 2021. Largely as a result of expansion in the distribution network, the introduction of different government schemes and financial inclusion drives.
LIC holds a 64% share of the total life insurance premium and grew at 9% CAGR from Fiscals 2016 to 2021. Private insurers grew at an 18% CAGR growth during the same period.
Global life insurance premium growth:
India’s protection gap was $16.5 trillion as of CY 2019, which was much higher compared to its Asian counterparts. The protection gap for India was 83% as of CY 2019, the highest amongst all countries in Asia-Pacific, as per the Swiss Re report “Closing Asia’s Mortality Protection Gap – July 2020”
Where does LIC stand amongst global peers?
Globally, Allianz S.E is the largest life insurer in the world in terms of life insurance premiums. Amongst the top global insurers, LIC is the only Indian player. LIC is ranked fifth globally in terms of life insurance premiums.
Ping An Insurance of China is the largest insurer in terms of total assets followed by Allianz SE. and AXA S.A. LIC is the eighth largest player with total assets.
What is the LIC policyholders category? Will LIC policyholders get any benefit if they apply?
“Policyholder” is a new category introduced for the LIC IPO, this category will have up to 10% of the issue reserved for the customers who hold policies of LIC. To apply in the policyholder category, you need to fulfill two conditions listed in the prospectus:
- You have purchased your LIC policy on or before Feb 13th, 2022.
- Your PAN has been mapped to your LIC policy on or before Feb 28th, 2022.
Note: If you’re applying in the policyholder category through your Zerodha account then, the PAN used for LIC policies has to be the same as that registered with your Zerodha account.
How do I apply to the LIC IPO?
You can apply for the LIC IPO using any supported UPI app by following two steps:
- Enter your bid on Console
- Accept UPI mandate on your phone
On acceptance of the mandate, the bid amount will get blocked in your bank account. Click here to learn more.
Are there any discounts offered for applying LIC IPO in different categories? How to avail this discount?
Yes, there is a discount for online applications under different categories. The IPO application process remains the same and the discount will be adjusted in the e-mandate blocked amount. The discounts are as follows:
| Category | Bidding at | Max Bid Amount (â‚ą) | Basis of Allotment if respective category is oversubscribed | UPI | Syndicate ASBA | Discount |
|---|---|---|---|---|---|---|
| HNI | At price | NA | Proportionate | Yes(Up to â‚ą5 lakh) | Yes | No |
| Retail | Cut off | Not above â‚ą2 lakhs | Draw of Lot | Yes | No | â‚ą 45 per share |
| Policy Holders | Proportionate | Yes | No | â‚ą 60 per share | ||
| Employee | Proportionate | Yes | Yes | â‚ą 45 per share |
Where do I check the allotment status for LIC IPO?
You can check the allotment status for the LIC IPO on the website of the Registrar and Transfer agent.
Alternatively, you can also check the allotment status on the NSE website.
