• Basis

All eyes on the LIC IPO!


In India, till the late 90s, LIC, or the Life Insurance Corporation, was the only insurance provider in the country! Today, despite the presence of several prominent private players, LIC continues to be a market leader.


But how did LIC become so popular?


To give you some context, LIC was created in 1956 – after merging 245 private life insurance players. This means that LIC has been providing insurance to Indians for more than 65 years now. Wow! That’s a long, long time.


This is probably why for most people, life insurance = LIC. Most of us have, at some point or the other, come across or heard about the ubiquitous LIC policy agent who goes door to door convincing people to invest in policies for themselves. And a whole lot of times, they do!


LIC has built a super-strong network of agents who have helped the company become almost synonymous with insurance in India. Coupled with this is their customer-centric business model — which results in almost 70% of insurance policies in the country being sold by them.


But in spite of it all, having an insurance policy is not yet a norm in India. Reasons for this include — a lack of credible information, excessive reliance on employer-provided insurance coverage, financial dependence on the male members of the family, to name a few key ones.


This is changing however, especially in the post-pandemic world. People have realized the criticality of insurance policies, especially life insurance and health insurance; and are signing up faster than ever before. Interestingly, an increasing number of women are now policyholders. Yes, you read right! SBI conducted a study stating that 1 in every 3 policies are now sold to women. Yay us!!!


Details about the IPO


The LIC IPO offers an opportunity for both investors and people to participate in a highly under-serviced sector. There’s been a lot of buzz and talk going around about this particular IPO, especially with the size being redefined, delay in launch date, and other minor hiccups. The LIC IPO is the biggest initial public offering in the Indian market and could make the company the third most valued company in the country.


Here are a couple of things you should know:


📈The LIC IPO opening date is May 4, 2022 and the closing date is expected to be on May 9, 2022. The shares may list on the stock exchange on May 17, 2022.


🏢The Government of India aims to raise ₹21,008.48 crores from this public issue. The share range is between ₹902 and ₹949. Existing policyholders can avail of a ₹60 per share discount, and retail investors and employees, a ₹40 discount per share.


What does this mean for you? The legacy and familiarity associated with LIC in the sector make it a relatively good bet. However, if you are someone who wishes to be a part of the buzz — read up on those financials as you evaluate your risk appetite, budget keeping in mind your short and long-term financial goals, and most importantly, see if it makes sense for your portfolio. And don’t forget, there is the possibility of oversubscription when it comes to this one.