Should India Go For An IPO Of Life Insurance Of India

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As India is going through the major Non Performing Assets and exposed the weakness of Indian banking sector predominantly in the public sector segment. Time to time, government jumped in to pump in additional fund within banking sector to keep it running. In this whole process, Life Insurance of India, Government of India undertaking proactively supported struggling bank with cash infusion and became the part owner of the these bank. Whenever Indian government owned company floats Offer for Sale with higher price point which are not well accepted by the investor community are supported by LIC India.


Indian generally believe more in government attached and approved insurance firm as many ponzy scheme in the past dented Indian consumer. Even after the relaxation of Insurance sector, around 80% of Indian population is not covered with Insurance and I am not considering Prime minister of India Mr. Narendra Modi initiated insurance for all as sum assured of those insurance policy is near to zero given the cost of living in India as nothing is being offered for free from government.

At the same time, being the oldest Insurance firm, they have Billions of $ sitting with them which is unaccounted for and at the same managing hundreds of billions $ assets. Lic India owns equity most of the blue chip company under their equity and debt investment plan and make more than $ 2 Bn on yearly basis.



As honorable prime minister of India, Mr. Narendra Modi, vision of making India as manufacturing, port, transport hub; I believe that Lic India may play a crucial role to fund those project. In case, government of India decide to go for listing, Lic India can easily be the number one company in market cap and may hover around $125 to $150 Bn . As per the Indian Equity market regulator body SEBI, public or institutional investor must own 25% of the company and that will help government to collect around $25 Bn to $30 Bn. I also believe that it will help government to reduce their market borrowing and also help India to get better rating from Global Rating agency.

Given the current trend of Indian equity market, it is the right time for government to give a shot at it rather than keep diluting 10's of metal or oil related company to garner less than $5 to $10 Bn yearly when they can get bigger pie. Rest assured that Lic India will be oversubscribed and will break all records.

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