Life Insurance Broker - Waiting For Lic's Ipo Know - Every Important Thing That You Should Know Before Investing_Pic Credit Google

Life Insurance Broker – Waiting For Lic’s Ipo? Know – Every Important Thing That You Should Know Before Investing

Life Insurance Broker – Waiting For Lic’s Ipo? Know – Every Important Thing That You Should Know Before Investing – Preparations are in full swing to bring the initial public issue of Life Insurance Corporation of India (LIC) i.e. IPO. However, it is not so easy to bring IPO of such a huge company; That is why the target for this has been kept till the end of this financial year i.e. March 2022. Bringing it before March means that it can come sometime between January and March. The cabinet has recently approved disinvestment in LIC. For this, the process of recruitment of merchant bankers is going on.

Life Insurance Broker – Waiting For Lic’s Ipo? Know – Every Important Thing That You Should Know Before Investing

The government has said that about 10 percent of the shares issued under this IPO will be reserved for LIC policyholders. They can get cheaper shares than others. According to a report by Indian Express, policyholders have bought about 289 crore LIC policies. The rules say that LIC will have to give this reservation as per the regulation of SEBI and on the basis of consultation with the exchanges.

According to the rules of IPO, a company can give shares to its employees at a maximum discount of 10 percent. But the point to be noted here is that the policyholders are not employees of LIC; Therefore, how much discount LIC can give to them, it will be a matter to be seen. The government has made changes in the LIC Act 1956 for this. How much share to sell through IPO; This will be decided by a committee headed by Finance Minister Nirmala Sitharaman.

After listing, like other companies, LIC will also be governed by the Companies Act and SEBI Act. It will have to make public its quarterly results of profits or losses and also inform the public about major developments from time to time through the exchanges.

What will be the benefit to policyholders: Even if the government gives shares to policyholders at a discount of 10 percent, the valuation of LIC can be Rs 10 to 15 lakh crore after listing in the stock market. As per SEBI norms, with a market cap of around Rs 10 lakh crore, LIC will have to bring an IPO of at least Rs 55,000 crore and if the market cap is estimated at Rs 15 lakh crore, it will have to bring an IPO of Rs 80,000 crore. .

Price is also important: What will be the price of shares in LIC’s IPO will also be very important, because the IPO experience of government insurance companies that came before it has not been good. In the year 2017, the share of New India Assurance Company was offered for Rs 770-800. It was listed on BSE for Rs 748.90 and today its share is very low around Rs 158. In the same year, General Insurance Corporation of India was listed on NSE at Rs 857.50, but today its price has reached around Rs 174.

Life Insurance Broker – Waiting For Lic’s Ipo? Know – Every Important Thing That You Should Know Before Investing

Why LIC’s IPO is important for the government: The disinvestment of LIC is very important for the government. The reason for this is that if it has to meet the disinvestment target of Rs 1.75 lakh crore in this fiscal, then it can be done by LIC only. Finance Minister Nirmala Sitharaman had announced in the budget that in 2021-22, the government wants to raise Rs 1.75 lakh crore through disinvestment. The plan for privatization of two public sector banks has not yet materialised.

Why investors will invest money in LIC: LIC has a monopoly in the Indian insurance business. Given the size and reach of LIC, its business prospects are expected to remain very strong going forward. LIC has a market share of around 66 per cent. As on 31 March 2020, the total assets of LIC were Rs 37.75 lakh crore. It has a vast network of 22.78 lakh agents and 2.9 lakh employees.

Not only this, LIC is one of the largest institutional investors in the stock market and it has been coming out as a savior for so many government companies. It has invested heavily in the stock market. Its huge investment portfolio is also expected to give good returns.

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