India’s Aramco Moment: LIC Listing To Be The IPO Of The Decade, Says Experts 

In what may lead to India's own Aramco moment, Finance Minister Nirmala Sitharaman on Saturday (1 February) proposed to launch an initial public offering (IPO) of insurance major, Life Insurance Corporation of India (LIC).

With an over 70 per cent market share in India''s insurance market, LIC is the largest player in the segment and experts believe its listing is likely to fetch a huge premium due to its low equity base.

Presenting the 2020-21 Union Budget, Sitharaman said: "Listing of companies on stock exchanges discipline a company and provides it access to financial markets and unlocks its value.

"The move also gives an opportunity to retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO)."

LIC is the largest financial institution in India and, experts say, it could become one of the top listed companies in the country with shares listed on the stock exchanges.

It may turn top-most in terms of market valuation, ahead of the current market leaders Reliance Industries and Tata Consultancy Services (TCS).

Vijay Bhushan, President, Association of National Exchanges Members of India (ANMI) reportedly said, "highlight of the budget is the LIC IPO, which is akin to the Saudi Aramco listing for Indian capital markets, and will be IPO of the decade."

"It will be the largest player and people will trust this kind of companies... I am sure people will appreciate it," said Rahul Sharma of Equity99, adding that LIC will be a "really good" IPO and there would be good returns.

The current leader in terms of market capitalisation, Reliance Industries, is the largest player in India with a market cap of nearly Rs 8.77 lakh crore.

Experts feel LIC might turn out to be India's Aramco as the Saudi Arabian oil major recently turned out to be the company with the largest market capitalisation globally.

In December, the Saudi company priced its initial public offering (IPO) at the high end of the targeted range, a level that will allow the company to raise a record total of at least $25.6 billion with a plan to sell 100 crore shares, or 1.5 per cent of its total shares, at a price of 32 Saudi riyals ($8.53) per share.

Aramco became the first company to hit a $2 trillion valuation on 12 December.

LIC has total investment assets of Rs 31 lakh crore as of 30 September, 2019. For the first time, LIC''s surplus has crossed the Rs 50,000-crore mark at Rs 53,214 crore in the financial year 2018-19, an increase of nearly 10 per cent.

LIC paid a dividend of Rs 2,610.74 crore in December for the financial year 2018-19 to the government. It has a market share of 76.28 per cent in a number of policies and 71 per cent in First-year Premium categories as of November 30, 2019.

The state-run insurer had expanded its annual surplus by 10.1 per cent to Rs 48,444.82 crore in fiscal year 2017-2018 and paid Rs 2,430.19 crore as the government''s share in FY18.

Among the insurance companies, most of the other private insurers are listed, with SBI Life Insurance Company having a market capitalisation of Rs 89,400.35 crore and ICICI Prudential Life Insurance with a market capitalisation of Rs 65,345.64 crore.

(With Inputs from IANS)