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The government revealed plans to list Life Insurance Corporation of India (LIC) on the stock exchange in its 2020 budget. In other words, launch an initial public offering of the LIC. The LIC IPO date 2020 has been rescheduled to the second half of 2021 owing to the pandemic. 

The purpose of this IPO was to ensure more discipline transparency in the company’s operations and give retail investors a chance to invest. A public offering does not signify LIC’s privatization as both are entirely different things. The government plans to sell a part of its stake through this IPO. Before we move on to the points we need to know before investing in the LIC IPO subscription, let us first learn more about the LIC itself.

What is the LIC IPO?

LIC has always been a government-controlled entity. An IPO occurs when a company decides to go public or list on the stock exchange. A major buzz is in the market following the listing of the LIC IPO date and price. Here are few things we need to know about before investing in LIC IPO shares:

  • Ms. Nirmala Sitharaman, the finance minister, first announced the disinvestment of equity in LIC in the Union Budget 2020. An amendment has been made in the LIC Act,1956 to facilitate the roll-out of IPO.
  • The amendment indicates the LIC will become a listed company and prepare quarterly earnings reports and balance sheets. Moreover, any developments within the company must be made public.
  • Mr. Arijit Basu, the former MD of State Bank of India and the former MD and CEO of SBI Life Insurance, has been recruited as a consultant to help with the launch.
  • Deloitte and SBI Capital are among the pre-IPO advisors. Whereas Milliman Advisor LLP India, an actuarial firm, is in charge of calculating the embedded value of the company.
  • KFintech, Hyderabad based company, has been appointed as registrar and share transfer agent.
  • Meanwhile, Mumbai-based Concept Communications has been chosen as the advertising agency.
  • Currently, the total valuation of the public offering is estimated to be around Rs. 70,000 to Rs 1 lakh crore. However, we still don’t know about the LIC IPO share price.
  • Out of a total of 18 banks, both domestic and international, only 10 were selected to manage the IPO. The deadline for bidding was August 5th. They were chosen based on their knowledge of life insurance, marketing strategies, and their experience in retail and international distribution.
  • Below is a list of some of the banks that have been shortlisted as book-running lead managers or BRLMs for the IPO:
  1. Goldman Sachs Group Inc,
  2. ICICI Securities Ltd,
  3. Kotak Mahindra Capital Co., 
  4. JP Morgan Chase & Co.
  5. JM Financial Ltd.
  6. Citigroup Inc
  7. Nomura Holdings Inc
  8. Axis Capital
  9. DSP Merill Lynch
  10. SBI Capital Markets
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  • The Cabinet Committee on Economic Affairs approved LIC’s initial public offering last month. Stakes to be disinvested will be determined by the Ministry of Alternative Mechanism on strategic disinvestment.
  • Currently, the allocation of the IPO includes the following:
  • The government will hold a majority stake even after the IPO.
  • There will be a 10% reserve for policyholders of LIC. They may even be able to get a discount on the offer price.
  • In this IPO, the government expects to raise around Rs. 1.75 lakh crore to meet its disinvestment goal. There are several proposals currently being reviewed to determine how to launch such a large project. 
  • There is no final confirmation for the LIC IPO date 2021 by the government. The government expects the launch to happen by the first half of the financial year 2022. The subscription details will also be disclosed soon.

Final thoughts on LIC IPO Launch Date

While the red herring prospectus of the IPO is still underway, we still don’t know about the LIC IPO date 2021 or any other details of the IPO. A couple of media reports claimed that the IPO might be split into two halves because of the huge issue size.  Most of the details of the issue are awaited.

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