LIC IPO Announcement
In the Budget speech of 2021, The finance minister Nirmala Sitharaman stated about the opening of Initial Public Offering(IPO) of Life insurance company. The IPO will be started from next financial year, which will be beginning from 1st April 2021.
The size of issue will be 10%, which will be reserved for the policy holders. The Minister of State for finance stated in reply to the query made in the Rajya Sabha that “In the Finance Bill 2021-22, it has been proposed to have a reservation on a competitive basis, to an extent of up to 10 per cent of the issue size, in favour of life insurance policyholders of LIC”.
There has been addition of the LIC Amendment act to the Finance bill, so that there is a legislative amendment for the launch of IPO of country’s largest and oldest insurance company.
The primary motivation for selling LIC shares in an IPO is to cover the fiscal deficit. The government set a high divestment goal of Rs 2.1 lakh crore for FY 2020-21 in the Union Budget, with over Rs 90,000 crore estimated to come from the sale of stakes in public sector banks and financial institutions.
Given that LIC is a huge financial market leader in terms of assets under management (AUM), when it is listed, it is likely to surpass TCS and RIL as the country’s largest business by market capitalization.
Market leader in life insurance
The listing of LIC on exchanges is also expected to be a positive catalyst for the industry. LIC has a wide range of plans for all insurance and investment needs for the Indian market. Single premium plans, children plans, pension plans, and term plan.
Some of the best performing plans are LIC Jeevan Umang, Jeevan Labh, Jeevan Anand, PMVVY and Jeevan Shanti. With eight zonal offices, 113 divisional offices, 2,048 branch offices, and a large field force of over 12 lakhs+ advisors, LIC has a widespread presence across India.
In addition, LIC has a global presence through joint venture companies and wholly-owned subsidiaries in a number of countries.
LIC is a profitable state-owned company with a strong brand recognition and confidence among Indians. For several first-time investors, the sovereign guarantee that applies to all conventional LIC policies makes it a favoured option among traditional investment products.
In general, the proposed LIC IPO appears to be a win-win situation for both the government and the investors. It’s no surprise that the LIC IPO is being dubbed “the mother of all IPOs.”
Update on LIC IPO, March 2021
LIC IPO: Up to 10% of issue size to be reserved for policyholders, source: Live Mint
Government proposes to hike LIC authorised capital to Rs 25,000 crore, Source: Economic Times
LIC IPO Date 2021-Price: Government looking at listing, Details Explained, Source: Zee Biz
LIC IPO: Here’s all you need to know about launch date, targets and other details, Source: DNA India
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