By
Temitope Olatunji
March 11th, 2024
The company maintains over $530 billion in assets and has 286 million policies in force according to the information declared in the draft prospectus. Its profit rose to $191 million in the six months ending in September last year.
India’s State-run Life Insurance Corporation (LIC) has filed with the nation’s market regulator to conduct an Initial Public Offering (IPO) in which it seeks to raise the sum of $8 billion. Per the details of the filing, the IPO will involve only a 5% sale of the company’s outstanding shares culminating in a total of 316.25 million shares through the public offering.
The IPO is considered the largest India would ever witness is one of the attempts by the Prime Minister Narendra Modi Government to beat its divestment targets and present the executive arm in good light with a vibrant market. However, according to a government source, the initial plan to raise about 900 billion rupees was quashed to the current 600 billion ($7.97 billion) rupees to make room for the broad market uncertainty.
That India’s Life Insurance Corporation (LIC) is the biggest in the country is backed by the numbers. The 65-year old company was founded by the government after two major players folded up. The company maintains over $530 billion in assets and has 286 million policies in force according to the information declared in the draft prospectus. Its profit rose to $191 million in the six months ending in September last year.
“Our corporation has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 64.1% market share in terms of premium (or GWP), a 66.2% market share in terms of new business premium (or NBP), a 74.6% market share in terms of the number of individual policies issued, a 81.1% market share in terms of the number of group policies issued for fiscal 2021, as well as by the number of individual agents, which comprised 55% of all individual agents in India as at March 31, 2021,” the LIC prospectus reads.
Potential for Survival for India’s Life Insurance Corporate Post IPO
The Indian stock market is a relatively tough terrain for the survival of new companies making it down to the public market scene. The three past biggest IPOs in India have seen a remarkable trim on their share prices since making their public market debuts.
The shares of Indian government-owned coal mining and refining corporation, Coal India Ltd (NSE: COALINDIA) are currently trading at 145 rupees, down from the 350 rupees it was trading at when it went public. Also, General Insurance Corporation of India (NSE: GICRE) and New India Assurance Company Ltd (NSE: NIACL) have also seen a remarkable trim in their share prices relative to the listing prices. Both are trading shy of 131 rupees, almost half of their original listing prices.
However, the fate of LIC shares may not trail these state-run companies as it is one of the most popular insurance cover providers around. The book runners for the IPO include Kotak Investment Banking, Goldman Sachs Securities, JPMorgan Chase & Co (NYSE: JPM), Axis Capital, ICICI Securities, SBI Capital Markets, and Bank of America Securities.