Buying LIC share in the upcoming Initial Public Offering (IPO) will not just be buying into equity of an insurance company, but would mean buying a pie of India’s equity market the way it is today, LIC Chairman MR Kumar said on Friday
Listing on May 17
The country’s largest life insurer, which is expected to be listed in bourses on May 17, is also fully geared up to ride its post-listing journey with all improved governance and transparent business practices that a publicly listed entity would warrant, Kumar added.
He was in the capital for a roadshow on LIC IPO, which will hit the market from May 4-9 with the anchor book opening on May 2.
‘Enough money on table’
Asked about the pricing of the ₹21,000-crore mega IPO, Kumar told BusinessLine that enough money has been left on the table for investors and policyholders. He also said that LIC would soon look to appoint a Chief Risk Officer and a Chief Digital Officer; these talent would be sourced from outside the organisation.
“Now that we are going to be listed, a whole new change is going to come for the organisation. We will be required to conform to SEBI’s LODR requirements and other listing norms. LIC has been fast to adapt to previous challenges (like the opening of the insurance sector in 2000) and there is no reason why we cannot do that in the future as well. I call this LIC 3.0. We welcome LIC 3.0 and know what we have to do”, Kumar said.
Ahead of the proposed IPO, LIC had, in early March, appointed Sunil Agarwal, who was earlier the CFO of Reliance Nippon Life Insurance for over 12 years, as Chief Financial Officer.
Enhanced disclosures
DIPAM Secretary Tuhin Kanta Pandey highlighted that being a listed entity, there will be enhanced disclosures and SEBI LODR regulations will apply on LIC.
“Tremendous amount of opportunities will be there of investors to ask questions of LIC.
LIC has always been on the investor side of the table. It will now be on the other side, answering investor queries. This two-way dialogue will be very beneficial for LIC,” he said.
Pandey also clarified that the government— which is looking to offload 3.5 per cent shareholding in IPO— has conveyed to SEBI that it would not come out with any follow-on public offerings for a year from the LIC IPO date. This is even as SEBI norms required only a six month cooling-off period.
Pandey highlighted that LIC would have to bring lot more disclosures in its post listing journey.
“LIC will have to bring about several other changes in order to keep pace with the requirements of a responsible, large, listed corporation. This is, after all, a journey,” he added.
He noted that the government is committed to wider ownership of the public sector organisation so that the people of India can participate in the wealth creation journey of these organisations.
Valuation issues
DFS Secretary Sanjay Malhotra said that LIC IPO provides good opportunity for both retail and institutional investors.
“On valuation side, some media are comparing valuation with other private sector peers in terms of Embedded Value (EV). That may not be right given the difference in sizes of LIC and its peers. LIC has been a large organisation and been doing business for a long time. As a multiple, you can look at differences between them but certainly not EV to market cap comparisons,” he said.
He also highlighted that insurance sector has shown good growth over the last few years and penetration of life insurance is going to be 3 per cent.
“There is huge scope for growth, not only in the life insurance industry, but also for LIC,” Malhotra said.