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7 7  * The Life Insurance Corporation of India was created on 1st September, 1956
8 8  * LIC had 5 zonal offices, 33 divisional offices and 212 branch offices
9 9  * The total number of Agents on Roll is 12,08,826 as on March 2020
10 -* LIC's IPO Likely To Open On May 4
10 +* LIC's IPO will open on 04 May 2022 – 09 May 2022 having Price range of Rs 902 – 949.
11 11  
12 +
12 12  [[image:LIC0.jpg||height="539" width="719"]]
13 13  
14 14  = Company Overview =
... ... @@ -118,8 +118,6 @@
118 118  (% class="wikigeneratedid" %)
119 119  [[image:LIC4.webp]]
120 120  
121 -{{putFootnotes/}}
122 -
123 123  = Financial Highlights =
124 124  
125 125  During the year 2019-20, the Corporation under Individual New Business, has procured 2,18,96,220 Policies with a First Year Premium Income of ₹ 51,227.83 Crore. The achievement to budget in NOP was 87.58 % and in FYPI 90.67 %. ₹ 13,202.35 crore premium earned under 1,68,779 policies of Pradhan Mantri Vaya Vandana Yojana. In Agency recruitment, the Corporation registered a net addition of 29,597 agents.{{footnote}}https://licindia.in/getattachment/Bottom-Links/annual-report/LIC-Annual-Report-2019-20.pdf.aspx{{/footnote}}
... ... @@ -139,15 +139,14 @@
139 139  
140 140  (% style="width:808px" %)
141 141  |(% style="width:230px" %)**₹ in million**|(% style="width:200px" %)(((
142 -**For the Six months ended**
141 +**For the Nine months ended**
143 143  
144 -**30-Sep-21**
143 +**31-Dec-21**
145 145  )))|(% style="width:122px" %)**31-Mar-21**|(% style="width:116px" %)**31-Mar-20**|(% style="width:137px" %)**31-Mar-19**
146 -|(% style="width:230px" %)Total Assets|(% style="width:200px" %)40,434,596.70|(% style="width:122px" %)37,464,044.68|(% style="width:116px" %)34,141,745.74|(% style="width:137px" %)33,663,346.17
147 -|(% style="width:230px" %)Total Revenue|(% style="width:200px" %)15,197.24|(% style="width:122px" %)29,855.71|(% style="width:116px" %)27,309.56|(% style="width:137px" %)26,449.96
148 -|(% style="width:230px" %)Profit After Tax|(% style="width:200px" %)15,040.13|(% style="width:122px" %)29,741.39|(% style="width:116px" %)27,104.78|(% style="width:137px" %)26,273.78
149 -|(% style="width:230px" %)Earnings per Share FV Rs 10|(% style="width:200px" %)2.38|(% style="width:122px" %)4.7|(% style="width:116px" %)4.29|(% style="width:137px" %)4.15
150 -|(% style="width:230px" %)Net Asset Value per share|(% style="width:200px" %)12.68|(% style="width:122px" %)10.38|(% style="width:116px" %) |(% style="width:137px" %)
145 +|(% style="width:230px" %)Total Assets|(% style="width:200px" %)40,907,867.78|(% style="width:122px" %)37,464,044.68|(% style="width:116px" %)34,141,745.74|(% style="width:137px" %)33,663,346.17
146 +|(% style="width:230px" %)Total Revenue|(% style="width:200px" %)17,573.50|(% style="width:122px" %)29,855.71|(% style="width:116px" %)27,309.56|(% style="width:137px" %)26,449.96
147 +|(% style="width:230px" %)Profit After Tax|(% style="width:200px" %)17,153.12|(% style="width:122px" %)29,741.39|(% style="width:116px" %)27,104.78|(% style="width:137px" %)26,273.78
148 +|(% style="width:230px" %)Earnings per Share FV Rs 10|(% style="width:200px" %)3.6|(% style="width:122px" %)4.7|(% style="width:116px" %)4.29|(% style="width:137px" %)4.15
151 151  
152 152  = LIC IPO =
153 153  
... ... @@ -192,62 +192,38 @@
192 192  [[Comments>>path:javascript:void(0);]]But the drastic lowering of ambitions for the IPO would be a setback for the government and challenge its fiscal balances as the disinvestment was positioned and aimed at replenishing the state's coffers.
193 193  
194 194  
195 -**Government appoints Kotak Mahindra, JP Morgan, Goldman Sachs, others as intermediaries.**{{footnote}}https://www.moneycontrol.com/news/business/ipo/lic-ipo-government-appoints-kotak-mahindra-jp-morgan-goldman-sachs-others-as-intermediaries-7445791.html{{/footnote}}
193 +**LIC IPO sees ‘excellent’ response from anchor investors**
196 196  
195 +May 2, 2022; LIC’s initial public offering on Monday saw ‘excellent’ response from anchor investors, an official said.{{footnote}}https://www.financialexpress.com/market/ipo-news/lic-ipo-sees-excellent-response-from-anchor-investors/2510902/{{/footnote}}
197 197  
198 -September 09, 2021; The central government on September 8, appointed intermediarie-Kotak Mahindra Capital Company, Goldman Sachs India Securities, JP Morgan India, ICICI Securities, and others for listing and partial disinvestment its equity shareholding in Life Insurance Corporation of India(LIC) via initial public offering.
199 199  
198 +The government is selling 22,13,74,920 shares in Life Insurance Corporation (LIC) at a price band of Rs 902-949 a share, targeting to raise about Rs 21,000 crore. The issue would be open for subscription for institutional and retail buyers from May 4-9.
200 200  
201 -LIC has appointed Kotak Mahindra Capital Company, Goldman Sachs India Securities, JP Morgan India, ICICI Securities, JM Financial, Citigroup Global Markets India, Nomura Financial Advisory and Securities (India), Axis Capital, DSP Merrill Lynch, and SBI Capital Markets as book running lead managers, says a circular on DIPAM website.
202 202  
201 +The issue opened for anchor investor subscription on Monday and saw ‘excellent’ response, an official said, adding that the details of price bids would be known later in the day.
203 203  
204 -Hyderabad-based KFintech has been appointed as registrar and share transfer agent. Meanwhile, Mumbai-based Concept Communications has been chosen as advertising agency.
205 205  
204 +The LIC share sale would be the biggest ever amount raised through an initial public offering in the Indian stock market. The previous such high fund raising was seen in IPO of PayTM in 2021 at Rs 18,300 crore and Coal India in 2010 at Rs 15,200 crore.
206 206  
207 -Earlier on September 2, the government for the second time sought bids for legal advisors for the listing of Life Insurance Corporation (LIC), which is expected to be the largest public offering in the Indian history.
208 208  
207 +Of the over 22.13 crore LIC shares on offer, over 9.88 crore shares are reserved for qualified institutional buyers and over 2.96 crore shares for non-institutional buyers.
209 209  
210 -The Department of Investment and Public Asset Management (DIPAM) said the last date for the bids is September 16. DIPAM Secretary Tuhin Kanta Pandey recently said he expects the LIC listing to take place in the current fiscal year (2021-22).
211 211  
210 +Up to 15,81,249 shares and 2,21,37,492 shares are reserved for employees and policyholders.
212 212  
213 -During the Budget speech for FY22, the government announced an ambitious divestment target of Rs 1.75 lakh crore. Most of this amount is expected to be mopped up through the LIC IPO and privatisation of a number of companies including Air and Bharat Petroleum Corporation (BPCL).
214 214  
213 +While retail investors and LIC employees will get a discount of Rs 45 per share, LIC policyholders bidding in IPO would get a discount of Rs 60 a share.
215 215  
216 -**LIC issue size could range from Rs 53,500 crore to Rs 93,625 crore; issue price may be Rs 1,693-2,962 per share **{{footnote}}https://www.moneycontrol.com/news/business/ipo/lic-ipo-issue-size-could-range-from-rs-10-7-18-7-lakh-crore-issue-price-may-be-rs-1693-2962-per-share-8087611.html{{/footnote}}
217 217  
218 -**February 16, 2022**; A simple arithmetic pegs LIC’s issue size at upwards of Rs 50,000 crore with a per share value in the range of Rs 1,600 to Rs 2,900.
216 +LIC would start trading on the stock exchanges on May 17.
219 219  
220 220  
221 -Here is how the math flows. LIC’s embedded value as on September 30, 2021 has been estimated at 5.39 lakh crore. Currently, private insurance companies trade at a multiple of 3-4 times embedded value.
219 +LIC’s embedded value, which is a measure of the consolidated shareholders value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
222 222  
223 223  
224 -However, embedded value is only an estimation of value based on several assumptions and the multiple attributed to an insurer could vary based on several qualitative factors.
222 +Based on investor feedback, the market value of government-owned LIC has been pegged at 1.1 times its embedded value or Rs 6 lakh crore.
225 225  
226 226  
227 -Considering its size, and dominant position in the market with 66 percent market share in new business premium, its growth rate may not match up to some of the nimble footed private insurers.
228 -
229 -
230 -A range of embedded value multiple between 2-3.5 throws up a valuation for the corporation ranging from Rs 10.7 lakh crore to Rs 18.7 lakh crore. Based on the total equity capital of 632 crore share, the issue size for a 5% offer for sale works out to Rs 53,500 crore to Rs 93,625 crore.
231 -
232 -
233 -The per share price thus works out to Rs 1693 to Rs 2962. Against this, the government’s average cost of acquisition of shares stood at Rs 0.16 as LIC went through a capital rejig ahead of the IPO.
234 -
235 -
236 -LIC’s initial capital, when it was incorporated, was Rs 100 crore. Since LIC was a collective, and not envisaged as a public limited company, there were no shares allotted. To transform the corporation into a corporate structure with shareholders ahead of the public issue, the original capital of Rs 100 crore infused by the government during the inception of the corporation was converted into share capital by allotting shares of face value Rs 10 for an equivalent amount.
237 -
238 -
239 -In September 2021, the corporation then allotted an additional 62.24 crore equity shares at the same face value against the free reserves outstanding in LIC's book as on March 31, 2020.
240 -
241 -
242 -Then again, another 560 crore equity shares of the same face value was allotted against the retained share of surplus of the government of India for fiscal years 2020 and 2021. LIC’s total capital now stands at Rs 6,324 crore.
243 -
244 -
245 -LIC’s valuation at 2.5 times embedded value corroborates with the government’s pared down target for disinvestments for FY22. This appears to be in line with what big institutional investors may be willing to pay for a company that will continue to be pre-dominantly owned by the government. The government revised its disinvestment target for the current fiscal to Rs 78,000 crore, of which Rs 12,000-odd has been garnered so far during the fiscal.
246 -
247 -
248 -Besides, the muted expectations on the valuation LIC and the proposed issue size has to be viewed in the light of the current state of market where foreign investors have been continuously selling. A large issue size only means more selling from domestic mutual funds that would want to sell down existing position to make room for allocation to LIC, fuelling additional volatility in the market.
249 -
250 -
251 251  = References =
252 252  
253 253  {{putFootnotes/}}
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