LIC is a household brand in India, and despite being the entry of a private company, it maintains a firm grip on India’s life insurance industry. LIC sells insurance policies, and they collect money (premiums) from clients and promise to offer future monetary benefits in exchange. Following the receipt of these premiums, they invest the funds in stocks, bonds, and other financial products following the regulator’s standards.
The federal government holds the LIC’s whole stock. The impending LIC IPO, which is scheduled to launch in March 2020, would be purely for sale; the government intends to have a 75% share in LIC. The firm is offering millions of policyholders the option to participate in the LIC IPO at a discount. It is publicizing the offer on television and in full-page newspaper advertising.
The LIC IPO will help the government generate much-needed funds through privatization falling behind schedule. India is moving on with the country’s largest initial public offering; a massive job made all the more difficult by inflationary fears and a difficult global market for investors. Prime Minister Narendra Modi’s government plans to sell a 5% stake in Life Insurance Corp. of India and must raise about 600 billion rupees to help fill a gaping budget deficit.
Why Should You Invest in the LIC IPO?
These are some of the main reasons why people should consider investing in this initial public offering –
- The Life Insurance Corporation of India is a well-known brand with a strong market presence and solid financial status.
- LICs may bring significant benefits to investors. In the June quarter, the business generated about Rs 10,000 crores in stock market profits. LIC is an attractive investment prospect for many because of its excellent financial position, large fund size, and government affiliation.
What are the Various Opportunities?
Technology displaces the conventional business method in every sector and industry, and insurance is no such exception. The insurance industry is one where technology has played a major role. LIC has developed several digital solutions but not as many as its private sector counterparts. According to an analysis on LIC IPO, advanced technology such as AL&ML can aid the firm in various ways and boost the company’s operations on a larger scale.
LIC has an amount of excess capital, which it may put to good use by investing in new-age businesses to profit from technological advancements and earn a lot of money.
Marketing and Growth
LIC should invest extensively in promotion and marketing to develop new product offers and appeal to clients. The company can extend its product line and serve clients by launching new products based on future demands.
Due to LIC’s traditional business model, the corporation fails to provide good service to its clients. The corporation should prioritize advertising and marketing operations to boost new product offers and cater to clients. The corporation has a large amount of cash that may get utilized to buy firms and invest in new-age enterprises. The company can benefit from technological changes while also earning better returns.
Opportunities for Policyholders
Policyholders should be aware that up to 10% of the available size has been set aside for this group. In addition, the government intends to provide policyholders with a discount in the LIC IPO. The issuance size has not yet been disclosed, but it is likely to be released soon.
Equity shares in the LIC IPO will be allotted to all successful bidders, including the policyholders, only in the Demat form. The investor should have a Demat account to apply for the offer. Bidding in LIC IPOs is done in lots, the minimum number of shares that an investor needs to bid for. Moreover, the number of shares in a ‘lot’ will depend on the issue price fixed by the company.
First-time investors can free open a Demat account at the IIFL Securities portal. After receiving login credentials, they can begin their investment journey.
Opportunities for Employees
In the offer, the insurance company has made bookings for its staff. When an employee additionally has LIC insurance, they can apply under the employee, policyholder, and retail categories.
Lastly, the IPO may strengthen the accountability and openness of Indian stocks. It also has a diverse company portfolio and offers various services to customers.