Yes, today we are talking about India's biggest IPO to date. You got it right its LIC.
To start with I will tell you some well-known facts about LIC. Life Insurance Corporation of India (LIC) is an Indian statutory insurance and investment corporation headquartered in the city of Mumbai, India. It is under the ownership of the Government of India. Was established in1956 by merging 245 companies. Handling a life fund of more than ₹28.3 trillion and has more than 290 million policyholders. It has been in the news since Finance Minister Nirmala Sitharaman announced a proposal to conduct an initial public offering for LIC in the 2021 Union Budget. People have been eagerly waiting for the IPO since then and in February 2020 people were happy that it is occurring in March 2022. With a little delay, it is finally occurring in May 2022.
Now we will come to some lesser-known facts. Almost 89.7 million dematerialized (demat) accounts existed at the end of March 2022, registering a jump of 63% in FY22, data from the Securities and Exchange Board of India showed. In FY21, the demat tally had risen nearly 35% to 55.1 million. It shows us the increasing interest of the people in the share market. Yes, you can already gaze the hype created by the IPO. The interesting fact is that more than 1.21 crore demat accounts have been opened by LIC policyholders.
You might be asking why to write a catchy title and just tell the facts about the company and the IPO. So heading straight over there, LIC is trying to raise ₹21,008.48 Cr and offering retail investors and employees a discount of ₹45 per share. And along with this, there is another offer for policyholders of ₹60 per share. There was news by the company in late 2021 that policyholders will be given preference for the allotment of the IPO. This along with the discount the policyholders are getting a lot of benefits and hence more than 1.21 crore policyholders have opened a demat account. But how is LIC raising funds with this? The answer is that many people also have bought a policy from LIC just so that they can enjoy the preference and the discounts. We don’t have the numbers but we can estimate around 1-2 crore investors taking a policy from the company. So basically LIC is already harvested a good amount of fundraising just by declaring benefits for its customers. Who in the world would have thought that just opening out for an IPO would bring in so many funds for the company.
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