lic ipo the biggest ipo in india
what is LIC?
in simple words LIC is the govt of india company which does different type of insurance in india. but wait it is not as simple as that . when you see the asset under management of LIC your mind will be amazed. LIC popularity can be simply understand by the fact that people in india don't say they have taken insurance but they simply say they have taken LIC. When it comes to the common people in india life insurance mostly means only LIC.
why LIC ipo ?
the process of LIC ipo has started as the govt of india intiative of divesting. The govt of india has announced that it will sell its stake in the govt share holding company .as a part of raising money and for it's efficient running
Currently, the government owns a 100 per cent stake in LIC. Once listed, LIC is likely to become the country's biggest company by market capitalisation with an estimated valuation of Rs 8-10 lakh crore.
The market valuation of LIC is likely to be around in the range of 13-15 Lakh crore according to one of the government top secreatory . so if this valuation is correct then LIC would become the bigget market cap listed company beating the giants such as reliance and Tata consultany services.
Investing in LIC
1) if you are thinking of investing in a insurance sector company after LIC listing so LIC can be a good buy for investors who are expecting and average of 10-20% annually with minimum risk or downside on investment so LIC can be a good buy.
2) The basic point is that after covid-19 life insurance are growing which will surely be beneficial for giants such as LIC in india.
3) one of the biggest strength of LIC is it's huge agent base number of which is almost in lakhs.
4) The trust of the government of india and the vast size and household name of LIC
there are't too many cons in LIC but there are definitely some
1) It's not today enjoying the monopoly that it was one enjoying years back because many private and efficient and good companies has also come in the insurance sector thus competition rising for LIC
2) [It's managed by government] although this con is not fully right as we know that is LIC is among the best companies when we see it's claim settling ratios but we are just saying that if we assume two institutions having same size in same business one run by government and other run by a private company then there is some more chance that the private one will be more efficient and helpful and supportive than the public one.
On the business performance front, LIC India grew from about Rs.200 crore of new business in 1957 to around Rs.1000 crore by 1969-70. A decade later, the new business contribution increased to Rs.2000 crore. By 1985-86, the sum assured on new policies had increased to Rs.7000 crore. With computers entering regular people’s lives in the 1990s, the company introduced online service to agents and policyholders. In 2019-20, the company procured around 2.19 lakh new individual policies with a first-year premium income of Rs.51227.83 crore.
LIC company listing impact on markets
first the biggest impact of LIC listing will be the amount of money it will suck from the market.Let's understand it from a basic example. suppose if a small ipo is worth 500 crore and it is subscribed 200 times then simple calculation is that it will pull almost 1LAKH from the stock market. but we know that that money just return after people don't get share and they are refunded. Letso just think that if 500 crore ipo withdraws almost 1LAKH crore from the stock market. Then just think that the amount of money that LIC will withdraw from the market. let's do a wrong assumption suppose if LIC ipo subscribed 5 times and the size of the ipo be 80,000 crore fund raising then the amount of money it will withdraw from the market. will be approximately 4Lakh crore and that money is enough for the market liquidity withdraw and the market will surely disturb from the LIC ipo . and we have just assumed that the ipo is subscribed 5 times which is surely wrong and foolish . in the above line we have seen that the amount of money that is refunded and people will don't get share but . LIC almost 1LAKH crore will definitely suck that money from the market. and after share allotment the money of share allotment will not definitely not come back. and surely that will change the market liquidity and market rise after the unionbudget2021.
LIC ipo details
Issue Open Date Expected in FY 2020-21
Issue Close Date Expected in FY 2020-21
Issue Type Book Building Offer
Issue Size Rs 80,000 to Rs 1,00,000 crore* [Tentative]
Book Building Proportion Employee Reservation : [.] shares, QIB (50%) : [.] shares , NII (15%) : [.] shares, Retail (35%) : [.] shares