The initial public offering (IPO) of the Life Life Corporation (LIC) may be Rs 400-600 per share which costs Rs 25,000 as rent and the total value between Rs 10-15 lakh crore.
Price is actually the main function of capital and balance. The government has already proposed an increase in the capital from the existing Rs to Rs. The Rs 25,000 crore will be the authorized capital to facilitate the listing as under the minimum wage, the price of the IPO will go in lakh per share. In fact, the LIC does not require a large sum of money because of the king’s guarantee.
The new authorized share capital is classified as Rs 25,000 crore which can be divided into 2,500 crore shares of Rs 10 each in terms of amendments proposed in the LIC Act, 1956. To assume, the authorized capital as a paid capital, LIC has a total amount of 2,500 crore shares for a face value of Rs 10 each.
The second part of the IPO price calculation is the embedded value (EV) and the total value of the organization. Work on EV integration is currently underway. Once the EV is known, investment banks in consultation with bank investors will adjust the price, which will be at a specific EV number.
Chief Economic Adviser K. Subramani previously stated that the government could raise 90,000 rupees by selling 6-7 percent of the stock in LIC. This was the first statement of any major government function on the IPO issue after Finance Minister Nirmala Sitharaman announced the plans for the LIC IPO in his FY21 Budget speech. The CEA had demanded that you make the figures on the back of the envelope, based on which the total value was Rs 12.85-15 lakh crore.
Given the two main variables of total value and possible estimates, the IPO value ranges from Rs 400 to Rs 600 per share.
However, the price of an IPO may change if the government decides to deduct a lump sum payment from 2 500 crore authorized shares to 1,500 crore shares or less than 1,000 crore shares. Similarly, actual measurement figures will also change the price. Estimating LIC at the age of 64 is a very difficult task. The LIC is governed by a special LIC law with an insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI) with very little say in regulating its operations.
Second, the product mix of LIC is also very different, which focuses on savings rather than protection (as in other listed health insurance companies). There is also an independent guarantee that supports the entire policy.
The actuarial company will first consider the death rate, interest marks, etc. In order not to enter the existing business value available to EV. There are also concerns about a unique dividend system where policymakers invest more than 95 per cent and shareholders (currently, the Government of India) receive 5 per cent. This setting may make lower revisions to LIC ratings. But there are positive aspects such as a large market share, product equity, wealth in key areas and a share in LIC Housing Finance, IDBI Bank, etc.
In line with the proposed amendments, the government plans to hold at least 75 percent of the LIC estimates in the first five years after the IPO, and in time reduce its hold to 51 percent. It also plans to allocate 10 percent of the size of the LIC IPO release to policymakers.