Valued at $ 203 billion, India calculates the LIC IPO, its largest ever | Business and Economic Affairs

In the picturesque courtyards of Mumbai, bankers rush from time to time to test a company that has not been respected for years. Officials are burning midnight fuel in New Delhi, working on electricity cuts to secure a chance to compete against anyone in Asia this year. And across the country, newspaper advertisements warn more than 250 million people who have information about the chances of having a company that is as old as India if it were granted independence.

For almost two years, India has committed itself to a much bigger project: accounting for the largest insurance in the country – with assets estimated at $ 500 billion and its estimated value of $ 203 billion – on what could be their biggest list. Some banks have reported on the public offering of Life Insurance Corp. of India, or LIC, as the moment of Aramco of India. In the case of the $ 29.4 billion Gulf giant, the world’s largest LIC giant will test the depth of the world’s largest markets and the global desire for state-owned gemstones.

Success is not guaranteed. About two months after its launch, consultants have been drafting a number of legal documents to come up with an integrated LIC value – a very important metric. Banks around the world are worried about the independence of an organization that is forced to work to save banks from collapsing banks and public finances. Local retailers are skeptical that the 65-year-old company could compete with newcomers.

The downtrend could see LIC raise $ 10 billion from the IPO and reduce it by 5%. This could be the third largest in the world to have insurance. Most importantly, it could tarnish the reputation of the Prime Minister Narendra Modi as a market reformer before major government elections and contribute to budget cuts.

“If this list goes on, it could change the whole picture of the whole of India,” said James Beeland Rogers, who has been selling the coming markets for decades and is the chairman of Beeland Interests Inc. and Rogers Holdings.

Giant Growth

LIC is a household name in India. With 2,000 branches, more than 100,000 employees and 286 million plans, the Mumbai company reaches almost every corner of the country. The large size of the LIC reveals the difficulty of writing which is well in the black box.

The insurer releases its costs once a year, meaning that no numbers are available to the public to determine its value, which includes the present value of future value and the value of the asset. Milliman and Ernst & Young supervisors overseeing this study should analyze the piles of data to calculate the number of deaths, illnesses, losses and volunteers.

Comparing your peers is hard. The LIC, enacted in 1956, follows the rules set by a special parliament and not the law that governs other insurance companies in the country. As of March 2020, LIC assets were valued at approximately $ 5.8 billion, according to an expert in the field, although it is not known if all of these were adjusted to suit the current market.

LIC plans to file IPO records in the last week of January, which will cover the combined cost and quantity of shares sold, according to people who are aware of the issue.

“The proper internal audit, which needs to be done, you can imagine with this large company almost every year, has not happened,” said Nirmala Sitharaman, India’s finance minister in October in an interview with Bloomberg. “Criteria for maintaining accurate and accurate readings – as well as the tests that need to be validated – are all in place now.”

Sitharaman has set a deadline for March to compile the list. If investors meet the $ 203 billion target set by the government, LIC could compete with India’s largest companies – Reliance Industries Ltd. Increasing the budget deficit, which is expected to be 6.8% this year.

LIC declined to comment.

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Another problem is attracting foreign investors to LIC.

The ten banks that oversee the list spoke to almost all major investors who may be interested in buying shares, including GIC Re, Canada Pension Plan Investment Board, Blackrock Inc. and Abu Dhabi Investment Authority, according to people familiar with the matter.

Many Mumbai advertisers around the world want to know if LIC can have independence from the Indian government after the lists. They were initially skeptical, the people said, realizing that the company had signs of a slow-moving arm of the establishment.

With the potential to receive at least $ 10 million ($ 135,000) in total, the revenue you earn from LIC could be minimal if you take away the good reputation of offering a share that could be a major component of the already hot market in India, some people said.

GIC and Blackrock did not respond to a request for comment. CPPIB and Abu Dhabi Investment Authority declined to comment.

But for those with a budget that doesn’t have a lot of space to invest their money after the Chinese economy expires last year, LIC could be a good bet. The company has one of the world’s leading insurers in the world, with two thirds of the Indian insurance market.

The LIC also has a guarantee of independence on all repayment loans, meaning it can work with less money than its competitors. With a price that could be four times higher than AIG, the company could attract investors who want to repay with security.

“The Life Insurance Corporation IPO is an excellent development not only in India’s major markets, but also India’s economic growth,” said Mark Mobius, a emerging market participant and founder of Mobius Capital Partners LLC.

He also referred to major state-owned enterprises such as LIC as “the growth of the Indian stock market is often high, which makes it attractive to big investors such as pensions and brutiments not only in India but also abroad.”

India had a bigger year for IPOs last year and the strong visibility of LIC will only continue to grow. The list raised about $ 18 billion by 2021, despite mixed results from other sources, which included Paytm, a digital payment service, and Zomato, at the start of the meal.

Greatest Rise in India

As the last day draws to a close, the Indian labyrinthine state has become increasingly troubled.

Officials from the Disinvestment department pull out sleepers all night, double check the notes and open their doors to let in the cool sunlight as New Delhi lights go out. Banks are working on holiday trips in the Himalayas and Maldives. LIC officials said they missed birthdays, leaving on weekends and working with patients.

Rural Indians are rushing to make sure they are eligible to receive a piece of bread. LIC has begun sending SMS messages to its agents and publishing newspaper ads with the theme: “It is best in life to be prepared.”

Raj Kumar Shukla, a business director based in Kiraoli, a village in northern India, said a colleague had warned him about the IPO, which prompted him to drop the program to pursue stocks. He saved 50,000 rupees (about $ 670) and opened a demat account to sell to LIC.

“The government will benefit from this list,” he said. “They can use the money to improve the country.”

Modi’s opponents have devised a way to withdraw money in various ways. Anshul Avijit, a spokesman for the Indian National Congress, a major opposition party, said in an interview that the IPO “provided our resources, gradually, gradually, to a select few.” He called the measure “anti-poverty.”

But in contrast to Aramco’s 2019 IPO, in which Saudi Arabia relied on rich citizens to buy shares after the global currency was disrupted by the regime’s massive budget, the Modi government has asked for another option: give up to 10% of LIC’s IPO 10%. he has a point. the whole world.

Giving ordinary Indians a share in the LIC could result in political instability ahead of regional elections starting next month. Many activists are scattered across northern India, where the ruling Bharatiya Janata Party hopes to gain power.

“The Prime Minister has always said that ‘the government has no business to do business with,” said Gopal Krishna Agarwal, a BJP state spokesman.

Whether all the pieces come together is everyone’s idea. But the potential rewards are many: About half the IPO could be raised from investors, including teachers, small business owners and parents to save for their children’s college fees.

The home style that is already known in every part of India, from the Kashmir Mountains to the villages of the Andaman Islands, may be famous all over the world.

“I tell all my clients to use it,” said Bhagvati Prasad Sharma, one of LIC’s 1.3 million sponsors.