LIC IPO | Draft papers filed. Here are the highlights of DRHP

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Life Insurance Corporation of India on February 13 filed a draft red herring prospectus with Securities Exchange Board of India(Sebi) to raise funds via initial public offering. Currently, the government holds 100% stake in the firm.

Here are the highlights of the draft papers:

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: The firm has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 64.1% market share in terms of premiums (or GWP), 66.2% market share in terms of New Business Premium (or NBP), a 74.6% market share in terms of number of individual policies issued.

It holds 81.1% market share in terms of number of group policies issued for fiscal 2021, as well as by the number of individual agents, which comprised 55% of all individual agents in India as at March 31, 2021.

Global Ranking: LIC  ranked fifth globally by life insurance GWP and 10th globally in terms of total assets.

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 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.

Investments: Out of the total AUM, 37.45% or Rs 14.81 trillion invested in central government securities as of September 2021. In FY21, this investment was at 37.83% or Rs 13.91 trillion while in FY20 it was at Rs 11.93 trillion or 38.80% of its total AUM.

Around 24.77% of AUM or Rs 9.80 trillion invested in equities as of September while in FY21 total equity investment worth Rs 7.97 trillion or 21.67% of its total AUM. In FY20, around 15.02% of total AUM or around Rs4.62 trillion invested in equities. State government securities investment was around Rs 9.74 trillion or 24.62% of the total AUM as of September.

In FY21 and FY20 this share was around 26.16% and 29.37% or Rs 9.62 trillion and Rs 9.03 trillion, respectively.

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 networth 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 networth for the fiscal was at Rs 189.01 crore versus Rs 131.90 crore a year ago.