{"id":1218,"date":"2022-02-15T08:35:51","date_gmt":"2022-02-15T08:35:51","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=1218"},"modified":"2022-02-15T11:23:33","modified_gmt":"2022-02-15T11:23:33","slug":"lic-files-drhp-government-to-sell-5-of-its-stake-in-lic","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/lic-files-drhp-government-to-sell-5-of-its-stake-in-lic\/","title":{"rendered":"LIC files DRHP; Government to sell 5% of its stake in LIC"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>Life insurance corporation, the most awaited IPO is\nfinally here after filling its red herring prospectus with the market\nregulators SEBI.<\/p>\n\n\n\n<p>It will be one of the\nbiggest IPOs to hit, in the history of the Indian stock market. Lots of numbers\nand valuation of LIC and decisions on the same have delayed the LIC initial\npublic offering, wait is finally getting over soon. The government is holding\nthe entire 100% of the LIC accumulating to a total of 632.49 crore shares.<\/p>\n\n\n\n<p><strong>Facts on LIC<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>LIC\nranks 5 the globally in terms of Premium<\/li><li>The\ngiant insurance company ranks 10th globally in terms of assets.<\/li><li>It\nis the largest asset management company of Indi with Asset under management\n(AUM) of Rs 39.56 trillion on a standalone basis, which was more than 3.3 times\nthe total AUM of all private life insurers in India.<\/li><li>This\nAUM is almost 1.1 times more than the total AUM of the Mutual fund industry.<\/li><li>The\naverage ticket size of individual premium as of September 2021 stood at Rs\n16,944.<\/li><li>As\nof March 2021, LIC has a 66% market share in new business premium with 283\nmillion policies and 1.35 million agents.<\/li><\/ul>\n\n\n\n<p><strong>Assets managed category wise<\/strong><\/p>\n\n\n\n<p>The gem company of the Indian\nGovernment, Life Insurance Corporation of India, manages assets worth Rs39.56\ntrillion which is approximately 18.5% of India\u2019s annualized GDP for Fiscal\n2022.<\/p>\n\n\n\n<p><strong>&nbsp;&nbsp;&nbsp;&nbsp; Investment categorized as of September 2021<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>37.45%\nof total Aum, i.e Rs14.81 trillion is invested in government securities.<\/strong><\/li><\/ul>\n\n\n\n<p>This\ninvestment in FY21 was approximately around 37.83%, while in FY20 it was around\n38.80%, of the total AUM<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>24.77%\nof total AUM. i.e Rs 9.80 trillion is invested inequities.<\/strong><\/li><\/ul>\n\n\n\n<p>Investment\nin equities in FY21 and FY20 was around 21.67% and 15.02% of Total AUM,\nrespectively.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>24.6%\nof the total AUM is invested in state government securities.<\/strong><\/li><\/ul>\n\n\n\n<p>In\nFY21 and FY20, the investment in state government securities was approximated\nat 26.16% and 24.62%, respectively.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>8.07%\nof the total AUM is invested in corporate bonds.<\/strong><\/li><\/ul>\n\n\n\n<p><strong>Equity share details<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>LIC- 100% owned by government comprising of 632.49 crores shares.<\/li><li>Face Value-Rs10<\/li><li>Equity Up for sale- 5% stake<\/li><li>No of shares to be sold under IPO-31.6 crores shares<\/li><li>Pricing- Book building Process<\/li><li>Price of a share- estimated to around Rs 2000<\/li><\/ul>\n\n\n\n<p><strong>Valuation <\/strong><\/p>\n\n\n\n<p>Insurance companies are\nvalued based on the embedded value (EV), however, the life insurance\ncorporation of India has been exempted from the same to be revealed. The\nmammoth insurance company has been valued by the world\u2019s largest provider of actuarial\nservices, Milliman.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Embedded\nValue-5.4 lakh crores ( as of 31<sup>st<\/sup> September 2021).<\/li><li>Market\nValue- 16 Lakh crores(expected, as per industry standards)<\/li><li>Valuer-\nMilliman.<\/li><\/ul>\n\n\n\n<p><strong>Lead Bankers<\/strong><\/p>\n\n\n\n<p>A total of 10 bankers have\nbeen appointed to lead the biggest IPO in the country, to raise approximately\n63,000 crores. <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Kotak\nMahindra Capital<\/li><li>Axis\nCapital<\/li><li>Bofa\nSecurities<\/li><li>CITI\nGroup Global markets India,<\/li><li>Nomura\nFinancial Advisory,<\/li><li>Goldman\nSachs India Securities, <\/li><li>ICICI\nSecurities,<\/li><li>JM\nFinancial, <\/li><li>JP\nMorgan India<\/li><li>SBI\nCapital.<\/li><\/ul>\n\n\n\n<p>Registrar for the IPO is <strong>KFin Technologies Private\nLimited<\/strong><\/p>\n\n\n\n<p><strong>The objective of the Offer<\/strong><\/p>\n\n\n\n<p>The IPO is an offer for the sale of 31.6 crore shares\nby the Government of India. LIC will not receive any proceeds from the share\nsale. As per the DRHP, the objectives of the IPO are:-<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>achieve the benefits of listing the Equity\nShares on the Stock Exchanges; <\/li><li>carry out the Offer for Sale of up to\n316,249,885 Equity Shares by the Selling Shareholder (President of India,\nacting through the Ministry of Finance, Government of India).<\/li><\/ul>\n\n\n\n<p><strong>Category wise reservation<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Qualified\ninstitutional investor-up to 60%<\/li><li>1\/3<sup>rd<\/sup>\nof the anchor investors portion to be reserved for domestic mutual funds.<\/li><li>Policyholders-\nCan\u2019t exceed 10% (Policyholders with lapsed policy can apply for the IPO)<\/li><li>Employees-\ncan\u2019t exceed 5% <\/li><\/ul>\n\n\n\n<p><strong>The strength of LIC, make LIC a favorable investment\noption<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Fifth largest life insurer globally by GWP\nand the largest player in the fast-growing and underpenetrated Indian life\ninsurance sector; <strong><\/strong><\/li><li>Trusted brand and a customer-centric business\nmodel; <strong><\/strong><\/li><li>A cross-cyclical product mix that caters to\ndiverse consumer needs and an individual product portfolio that is dominated by\nparticipating life insurance policies; <strong><\/strong><\/li><li>&nbsp;Presence across India through an omnichannel\ndistribution network with an unparalleled agency force;<strong><\/strong><\/li><li>Harnessing technology capabilities to support\ncustomer connect and drive operating efficiencies; <strong><\/strong><\/li><li>Largest asset manager in India with an\nestablished track record of financial performance and profitable growth; <strong><\/strong><\/li><li>Robust risk management framework; <strong><\/strong><\/li><li>The highly experienced and qualified\nmanagement team, distinguished Board, and strong corporate governance\nframework.<strong><\/strong><\/li><\/ul>\n\n\n\n<p><strong>Financial Strength<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The\naverage Return on net worth over the last three years from 2019-to 2021 has\nbeen recorded at 182.25%.<\/li><li>The\nlatest net asset value has increased to 12.68 from 10.30 computed in March 2021.<\/li><li>Net\nprofit for as of September 2021 for LIC is Rs 29,741.39 million highest among\nother industry players.( SBI Life insurance-Rs 14,558.49 crores; HDFC life\ninsurance company limited- Rs13,608.72 million; ICICI Prudential \u2013 Rs 9,561.55\nmillion)<\/li><\/ul>\n\n\n\n<p>For the investor, the wait is almost over, as the LIC\nis expected to get the nod from the SEBI within 3 weeks from now. An investor\nmust gear up to take part in the largest ever IPO to hit the Indian market\nsoon.<\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 1,778<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"1218\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">2    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Life insurance corporation, the most awaited IPO is finally here after filling its red herring prospectus with the market regulators SEBI. It will be one [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/lic-files-drhp-government-to-sell-5-of-its-stake-in-lic\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":1219,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[70,10],"tags":[],"class_list":["post-1218","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ipo","category-featured"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/1218","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=1218"}],"version-history":[{"count":4,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/1218\/revisions"}],"predecessor-version":[{"id":1224,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/1218\/revisions\/1224"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/1219"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=1218"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=1218"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=1218"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}