LIC IPO: DRHP, issue date and size, valuation--everything you need to know

The valuation of the mega LIC IPO could be around Rs 15 trillion. Here's all you need to know about LIC IPO

The government-owned Life Insurance Corporation of India (LIC), the country’s largest insurance firm, has planned an initial public offering (IPO) that could be launched next month.

The LIC board is expected to meet on Friday, and is likely to submit a draft red herring prospectus (DRHP) to the market regulator, Sebi. The Insurance Regulatory and Development Authority (IRDAI) approved LIC's proposal on February 9.

The board is also expected to discuss a likely discount and the portion to be reserved for policyholders.

LIC has a majority share of the life insurance market in India. The government hopes to raise as much as $12 billion from selling a stake in the IPO, according to reports.

Under the current plans, the government will keep the majority of its stake in LIC. The stake cannot come below 51 per cent by law and that will be retained and even in 5 years, it could not sell more than 25 per cent of its stake in LIC.

LIC IPO: Issue size

The government is planning to offload around 5 per cent of the shares it owns in LIC. The embedded value of the company has been estimated at over Rs 5 trillion. The valuation of LIC IPO will be around three to five times the embedded value. The valuation of the mega LIC IPO could be around Rs 15 trillion. The government may sell 316 million shares.

Reserve portion for policyholders

LIC has over 29 million policyholders and around 1.3 million agents. A portion of the much-awaited LIC IPO will be reserved for them. Around 10 per cent of the LIC IPO would be set aside for the LIC policyholders.

LIC business growth

At 64.1 per cent or with a gross written premium (GWP) of $56.4 billion, LIC's market share is unparalleled globally. The New business premium stands at 66.2 per cent and the number of individual policies stands at 74.6 per cent.

LIC has 2,048 Branch offices, eight zonal offices, 113 divisional offices

The standalone assets under management (AUM) in FY21 stood at Rs 36.7 trillion vs Rs 16.8 trillion in FY20.

LIC has LIC Pension Fund, LIC Cards Services, IDBI Bank, LIC Housing Finance, LIC Mutual Fund Trustee Company and LIC Mutual Fund AMC as its subsidiaries.

In terms of total assets, LIC is the sixth largest with $522 billion.