LIC IPO: Government handed over draft paper to SEBI for mega listing, important points of DRHP

LIC IPO: The central government has submitted its draft red herring prospectus (DRHP) to market regulator SEBI to launch the much-awaited IPO of its owned Life Insurance Corporation (LIC) of India by March. Moneycontrol had already given this information.

The issue is expected to help the government meet its revised disinvestment target of Rs 78,000 crore this fiscal.

DRHP does not indicate issue size or valuation

Importantly, DRHP does not indicate the size or valuation of the issue, as talks with investors are still on. This is a 100% offer sale by the government, in which no new shares of LIC will be issued. About 316 crore shares of the company will be sold, which is equivalent to its 5 per cent stake.

Embedded value Rs 5.39 lakh crore

However, the embedded value is mentioned and it stood at Rs 5.39 lakh crore as on September 30, 2021. Embedded value is a metric used for life insurance to measure all future profits from the current business and the net worth of shareholders.

As of March 31, 2021, LIC had a market share of 66 per cent in new business premiums with 28.3 crore policies and 13.5 lakh agents. The picture is anticipated to be clear around the launch of the company’s IPO at a possible discount to policyholders, employees and others.

purpose of the offer

The object of the offer is to- (1) to avail the benefits of listing of equity shares on the stock exchange, (2) to make an offer for sale of equity shares up to 31,62,49,885 by the selling shareholders. The entire amount received from the offer will go to the Ministry of Finance, Government of India.

Main business of our corporation

Our corporation has been providing life insurance in India for more than 65 years and is the largest life insurance company in India. 64.1 per cent in premiums, 66.2 per cent in new business premiums, 74.6 per cent market share in number of policies.

main industry

The overall industry premium has grown at a CAGR of 11 per cent in the five years to the end of FY21. CRISIL Research estimates the industry’s overall premium to be Rs 12.4 lakh crore by FY2026 with a CAGR growth of 14-15 per cent.