Since the Finance Minister announced divestment plans for LIC in the budget of 2020, there had been a lot of speculations regarding LIC IPO size, LIC IPO launch date, LIC IPO share price, etc. Finally, during the budget session of 2021, FM Nirmala Sitharaman confirmed that LIC IPO would launch during 2022. LIC IPO new has created a lot of interest amongst investors, and so we will look at all the important factors associated with the offer.
LIC is the largest state-owned insurance company in India and commands a 69 percent market share in total insurance premium collection. In 2020 fiscal alone, LIC collected Rs. 1.78 trillion in the first-year premium, 25.17 percent higher than the previous year.
The government’s decision to divest LIC has created a lot of buzz in the market. News is that the Modi government is planning to raise Rs 90,000 crores from share selling of LIC. Given that the total market valuation of LIC is around Rs 12.-15 lakh crore, the IPO size will be 6-7 percent. It is going to be the largest IPO launch in the history of the Indian stock market.
In her speech, FinMin, Nirmala Sitharaman suggested that the IPO will launch during 2022. However, she didn’t say precisely when. The government also said that it has plans to reserve 10 percent of the IPO shares for the policyholders.
The government is planning to raise 43 percent of its total divestment target of Rs 2.10 lakh crore from the disinvestment of LIC and IDBI bank. The government is also in talks to divest Air India and BPCL, which will happen during the first six months of the next FY.
Ahead of the IPO launch, around one crore DEMAT accounts will be open since most LIC policyholders don’t have DEMAT account. Currently, there are only 4.5 crores DEMAT accounts in India. This would mean a lot of traction for CDSL and its holding company BSE.
Despite being hit by the COVID-19 pandemic, the Indian IPO market gave a stellar performance during 2020. Around seventeen companies raised more than Rs 25,000 crores from the market during the current fiscal, and five companies have launched their initial offers during January 2021. Overall, the market is buoyant and strong to see a lot of interest from investors. LIC IPO news has kept investors hooked since it was announced. It has come at a time when the stake sales of Air India, Concor, and BPCL have been put into the back burner twice due to the COVID-19 outbreak. We must now wait for more details to surface, but undoubtedly it will see a lot of interest from investors.
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