LIC IPO: Government will benefit, but policyholder bonus will be scissored from IPO

LIC IPO: Before investing in the biggest IPO, keep these risks in mind, otherwise there will be a big loss, know full details


New Delhi. Finally the wait for LIC IPO is over. LIC has filed DRHP (Draft Red Herring Prospectus) with SEBI. This means that LIC’s IPO may come soon. According to the document, the government is preparing to sell about 5 percent stake in LIC through IPO.

The government will sell about 316 million equity shares out of 6.32 billion shares. Its face value is Rs 10. All the money raised through this OFS IPO will go to the treasury of the government and not to LIC, as no new shares are being issued by the company. It is believed that this IPO will be of Rs 60,000 to 90,000 crores. LIC IPO will help the government to achieve the revised target of disinvestment of Rs 78 thousand crore.

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impact on work
The restrictions imposed due to the pandemic have also affected the functioning of LIC. Investment has declined. LIC’s share in the stock market declined to a record low in the December quarter. The market value has come down to just 3.67 per cent.

Claim settlement increased
LIC’s claim settlement has increased during Corona. The death claim amount was 17,128.8 crores in 2018-19, 17,527.9 crores in 2019-20, 23,926.8 crores in FY 20-21 and 21,734.1 crores between 1 April to 30 September 2021 in the current financial year. This is 6.79 percent, 6.86 percent, 8.29 percent and 14.47 percent of the total insurance claims.

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push the brand
Due to Corona, there was a tremendous increase in the demand for insurance. During this crisis, LIC employees and agents misused the brand name. This has given a big blow to the LIC brand.

risk management tool not working
LIC is working traditionally. Risk management tools are no longer effective. In the changing times, the method of risk evaluation and risk management has changed. LIS has not accepted any major change in this regard.

RBI’s condition
Life Insurance Corporation of India is the parent company of IDBI Bank and LIC Housing Finance. RBI said that either of the two will have to close their housing finance business within the next month. LIC IPO has been approved on this condition.

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business will be affected
India’s macro economy is weakening, while LIC’s business is dependent on the Indian market. If the economy slows down, the business of the insurance company will also be affected.

Inflation and interest rate effect
Europe, America and other Asian markets have an impact on the Indian economy and stock market. Global inflation is at a high level. The Federal Reserve is about to raise interest rates. Due to this there is a possibility of a fall in the domestic market. This will also have an impact on the IPO.

effect of change in rules
It has been said in the deposit proposal of SEBI that if there is any change in the rules, then it will have an impact on the business. In the coming time, if any kind of financial regulation comes in India or the world, then its effect will be visible. Any action on the corporate tax front will have an impact.

also the reason
There is a preparation to sell 5 percent stake in LIC. The 95 per cent stake would still be with the President of India, which is looked after by the Ministry of Finance. In such a situation, all the factors related to the government have an effect on it.

Tags: investment, LIC IPO, Life Insurance Corporation of India (LIC), SEBI


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