LIC IPO: Why the country's largest insurance company has to bring public offer, know everything

LIC IPO: Why the country’s largest insurance company has to bring public offer, know everything


New Delhi. The preparations for the listing of the IPO of Life Insurance Corporation of India-LIC, the country’s largest insurance company, are going on vigorously for several days. All eyes are on this IPO. LIC has filed DRHP with SEBI on Sunday. The government is promoting privatization to fill the treasury empty due to Kovid-19. Under him, LIC IPO is being brought to sell its stake in LIC.

Although the IPO price has not been decided yet, but market analysts believe that LIC will be the biggest IPO in Indian history. This will bring about 10 billion dollars to the government’s coffers. LIC was established in 1956. It was the only insurance company till the year 2000. In 2000, the insurance sector was also opened to private companies.

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This question is arising in the minds of many people that what is the need for the government to bring an IPO to sell its stake in such a valuable insurance company. There are also some doubts in the minds of LIC policyholders. Market experts believe that the government does not have enough money to strengthen the infrastructure. That’s why the government is now raising money by privatizing its owned companies. The economy has suffered a major setback due to Kovid-19. To overcome this, the government needs money. That is why now the government is engaged in the exercise of bringing LIC IPO as soon as possible.

LIC’s no competition

Life Insurance Corporation of India occupies two-thirds of the domestic life insurance market (LIC market share). Its total assets (Lic Assets) are 36.7 trillion rupees ($ 491 billion). This is 16 percent of the total GDP of India. There are about 1 lakh employees in LIC and about 1 million insurance agents work for it. LI has large offices in prime locations of almost every city in India. These include a 15-storey building in Chennai and its headquarters located in the heart of Mumbai. It is believed that LIC also has a huge collection of valuable artifacts. It also includes the paintings of famous painter MF Hussain. However, no one is aware of the value of this treasure.

That’s why LIC IPO is being brought

The Indian economy is passing through its worst days due to the Corona pandemic. India is in the worst phase of recession since independence. Kovid-19 has shaken the economy of the country. To bring Kovid-19 under control, the Government of India had to impose a nationwide lockdown. This had a very bad effect on the government exchequer and lakhs of people became unemployed. It also increased the number of people living below the poverty line.

LIC’s IPO will also help in completing the government’s efforts to raise funds from privatization. The government is also far behind from its goal of raising funds by privatization of government companies. So far the government has been able to raise only 120.3 billion rupees in this financial year. The government’s target was to raise Rs 780 billion.

Is LIC IPO the right investment option?

LIC is a well known name in India. It has a strong hold in the insurance sector. Even though many private insurance companies have come in the market today, but they have not been able to compete with LIC. LI is also giving discount to its lakhs of policyholders for investing in this IPO. For this, publicity is being done on a large scale.

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Analysts predict that retail investors will be very attracted towards LIC IPO. However, a lot of uncertainties also exist here for investors. The biggest concern of investors is whether LIC management will be able to take decisions independently. It is also not clear whether LIC will be able to maintain its market share in the midst of increasing competition.

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


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