Things you need to know about LIC IPO size and price
The LIC's embedded value has been calculated at 5.39
lakh crore as of September 30, 2021. Private insurance firms are currently
valued at 3-4 times the embedded value.
Embedded value, on the other hand, is merely an
estimate of value based on a number of assumptions, and the multiple assigned
to an insurer may vary depending on a number of qualitative characteristics.
Given its size and dominating position in the industry
(66 percent of new business premium), its growth rate may not match up
with some of the smaller private insurers.
The company's valuation ranges from Rs 10.7 lakh crore
to Rs 18.7 lakh crore when the embedded value multiple is between 2- 3.5. The
issue size for a 5% offer for sale works out to Rs 53,500 crore to Rs 93,625
crore based on the total equity capital of 632 crore shares.
As a result, the per-share price ranges from Rs 1693
to Rs 2962. As LIC went through a capital rejig ahead of the IPO, the
government's average cost of acquisition of shares was Rs 0.16.
When the LIC was founded, it had a capital of Rs 100
crore. There were no shares allotted to LIC because it was a collective rather
than a public limited company. The original capital of Rs 100 crore infused by
the government during the corporation's inception was converted into share
capital by allotting shares of face value Rs 10 for an equivalent amount to
change the corporation into a corporate structure with shareholders ahead of
the public issue.
The company then issued an additional 62.24 crore
equity shares at the same face value in September 2021 to offset the free
reserves outstanding in LIC's books as of March 31, 2020.
Then, against the government of India's retained share
of surplus for fiscal years 2020 and 2021, extra 560 crore equity shares with
the same face value were allotted. The LIC's total capital is now Rs 6,324
crore.
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