On Sunday, 13 February, Life Insurance Corporation of India (LIC) has released its draft red herring prospectus (DRHP) for its proposed initial public offering (IPO). The upcoming LIC IPO will be India's biggest share sale of all time. The subscription will be open for anchor investors but it will open in the next few days for other types of investors, including retail investors.

Here are the highlights of the LIC IPO DRHP:

• Issue size

The IPO consists of an offer for sale of upto 316.25 million shares or around 5% stake by the government of India.

• Lead managers to the issue

Kotak Mahindra Capital, Axis Capital, Bofa Securities, CItigroup Global markets India, Nomura Financial Advisory, Goldman Sachs India Securities, ICICI Securities, JM Financial, JP Morgan India, SBI Capital.

• Background

LIC is a market leader in India. It was established in the year 1956 under the Life Insurance Corporation Act and today it is one of the largest life insurer in India. The firm has 64.1% market share in terms of premiums (or GWP), 66.2% market share in terms of New Business Premium (or NBP) with 283 million policies and 1.35 million agents. Embedded value of LIC as on 30th Sep 21 is Rs. 5,39,686 cr(about INR 5.4 trillion).

• Total AUM

It is the largest asset manager in India as at 30 September 2021, with AUM (comprising policyholders’ investment, shareholders’ investment and assets held to cover linked liabilities) of Rs. 39.56 trillion on a standalone basis, which was more than 3.3 times the total AUM of all the private life insurers in India. This is approximately 16.2 times more than the AUM of the second-largest player in the Indian life insurance industry in terms of AUM, more than 1.1 times the entire Indian mutual fund industry’s AUM and 18.5% of India’s annualised GDP for Fiscal 2022. Moreover, LIC owns over 19% of all government bonds, making it bigger than the Reserve Bank of India. Post listing, LIC would be the largest investment in the government's portfolio of listed equities at 43% of US$377bn in AUM. Also, Proceeds from LIC would help meet the budgeted divestment target for FY22 (Rs. 780 Billion).

• Embedded Value

The LIC IPO would be the biggest IPO in the history of the Indian stock market. The DRHP mentions the embedded value of LIC to have been calculated at Rs. 5.39 lakh crore, which will make LIC, the 3rd-largest company by market cap after Reliance and TCS.

• Investments

As at September 30, 2021

• 50% or Rs. 14.81 trillion Central Government Securities

• 61% or Rs. 9.74 trillion State Government Securities

• 07% or Rs. 5.21 trillion Corporate Bonds

• 78% or Rs. 9.80 trillion Equity Securities

• 96% of LIC’s debt AUM was invested in sovereign and AAA-rated securities

• 90% of the equity investments were in stocks forming part of Nifty 200 and BSE 200 indices

• It is largest domestic institutional investor with market value of Rs. 8 Trillion

• Earnings

For the six month ended September 2021, LIC's total revenue was at Rs. 1900.94 crore while net profit stood at Rs. 69.39 crore. Its total assets was at Rs. 21949.37 crore while net worth stood at Rs. 8019.21 crore. For FY21, LIC's total revenue was at Rs. 3805.76 crore against Rs. 30198.22 crore last year. Net profit for the fiscal stood at Rs. 191.31 crore against loss of Rs. 11763.38 crore a year ago. Total net worth for the fiscal was at Rs. 189.01 crore vs Rs. 131.90 crore a year ago.

Here's how to download LIC DRHP from the SEBI website

1. Open the SEBI website – https://www.sebi.gov.in/
2. Click on the ‘Filings’ tab
3. Select on ‘Public Issues’ in the drop-down menu
4. Click on ‘Draft Offer Documents Filed with SEBI’ from the drop-down menu
5. List of DRHPs filed with SEBI will show up, with the latest one at the top
6. Click on the LIC link. DRHP will open a PDF format.
7. Download and save the copy

How to Apply for LIC IPO?

You can easily invest in the LIC IPO through the Edelweiss mobile trading app. Below mentioned are the steps to apply for the LIC IPO:

• Open the Edelweiss Mobile Trader app

• Visit IPO section from the left-hand side menu

• You will find the list of ongoing and upcoming IPOs. Select IPO in LIC

• Click to Proceed

• Enter the bid details

• Enter your UPI ID. Make sure that the ID is linked only to your bank account and click Submit

• Check details and confirm

• Once you do so, you will receive a notification. Else head to the Mandate section on your UPI app

• Accept the mandate request from the UPI app

• Once you do so, you have successfully applied for the LIC IPO

• You can seamlessly track the status of your application on the App

Conclusion

Now, you have read the key highlights of LIC IPO DHRP and you know where to find the DHRP to understand everything about the India’s biggest IPO. Read the DRHP, link you PAN to LIC Policy and open your demat account.

Related Articles: LIC IPO - Everything You Need To Know | What is an IPO? | Steps to Apply in an IPO | How to Find a Good IPO? | Things to Consider Before Applying for IPO | Can you Apply for IPO Using 2 Demat Accounts? 

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