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Riya Tayal | 18 May 2022

LIC to Unlock Value of its Huge Real Estate Asset

LIC to Unlock Value of its Huge Real Estate Asset

Life Insurance Corporation of India, often shortened as LIC, is the only Public Sector Undertaking (PSU) life insurance company in the country, running its operations since 1956. This insurance company in India is the most trusted brand that has penetrated the domestic market. For more than 65 years, LIC has been offering life insurance in India and is the largest life insurer with 61.6% market share in terms of GWP, 71.8% market share in terms of a number of individual policies issues, and much more.  

And, if you are someone who is looking forward to investing in the BSE LIC IPO listing, then, unfortunately, you’ve missed the opportunity because the subscription period has already ended on 9th May 2022. The LIC IPO listing is expected to garner Rs. 21000 crore at the upper end of the price range and will be a critical factor for the government to meet its divestment targets easily. 

This is just a brief about LIC unlocking the value of its huge real estate asset. Let’s move ahead now and gauge a detailed understanding of the same. 

LIC IPO Listing- Overview

LIC or Life Insurance Corporation of India IPO is the initial share sale of the insurance behemoth. The overall offer is an Offer for Sale (OFS), wherein the President of India will unload a 3.5% stake in the company through the Ministry of Finance. The LIC share price (IPO price) band is fixed at Rs. 902 to Rs. 949 per equity share. For your information, the LIC IPO listing date is May 17th, 2022, and the issue will debut on both National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). 

For LIC, the listing of its shares means a higher profile and visibility. Investors would be able to trade actively in its shares on the stock exchanges. If we think of it another way, it also means more transparency because LIC, which is now only answerable to the government of India, will have to inform exchanges and investors about all the price-sensitive information. In a nutshell, Life Insurance Corporation will be accountable to investors, who are waiting to demand high levels of corporate governance. 

Unlocking the Value of Huge Real Estate Asset- LIC

LIC will aggressively pursue unlocking the value of its biggest real estate asset. As per the latest updates, Siddhartha Mohanty, the MD of the insurance behemoth, was in the city for the IPO roadshow of LIC and declared that the state-run insurance company is cautiously taking back its properties. Yes, you read that right! Also, LIC has real estate assets in Kolkata, Mumbai, and other metropolitan cities. 

For now, the Centre is diluting a 3.5% stake in Life Insurance Corporation of India for Rs. 21000. This will offer the insurance giant a valuation of approximately Rs. 5.5 lakh crore. To narrow down the price dilution, the price dilution for retail investors is Rs. 904, while for QIBs, i.e., Qualified Institutional Buyers, it will be Rs. 949, and for policyholders, Rs. 889. If we talk about the LIC reserve, the state-run insurer has a reserve of over Rs. 30 lakh crore and its real estate is valued more than that. 

When Siddhartha Mohanty was questioned about the LIC IPO valuation, he said, “insurance company valuation is a bit different, and one has to see the embedded valuation.” However, Siddhartha admitted that when it comes to real estate, more than 100 litigations are in multiple courts in India. 

He also pointed out that in guaranteed products, the Life Insurance Corporation of India has to make provisioning. He added, “ In case of surplus, it goes to stakeholders. For deficit, we have to make up”. However, LIC is now making a strategy to give a push on bancassurance. “Although the share of bancassurance is now at 3.6%, we’re hoping to make it over 6%. This year, we’re giving special focus to it”, an official added. 

We hope this article has given you a deep understanding of LIC IPO listing. Though, you have already missed the chance of investing in the same but you don’t need to worry as LIC IPO investors are currently undergoing loss. 

Also read: Here's Why LIC IPO Listing Is Hurting Investors!!


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