LIC IPO: Chairman MR Kumar says company is ‘well capitalised’

Life Insurance Corporation of India (LIC) chairman MR
Kumar, on Monday, said that the company is well capitalised as it prepares for
the largest initial public offering in the country next month.

Kumar said that they are watching the geopolitical developments
closely as the company is keen to list in March. Addressing the press
conference, ahead of the issue launch, he said the IPO is getting a lot of
traction from policyholders.

Also Read | LIC set to launch $8 billion IPO on March 11: Report

“As of now, I do not believe that we require
capital. Going forward if there is any growth capital requirement, we will
approach not only the government but all the shareholders,” he said.

The Chairman assured that LIC’s potential investors
should not worry about government control post the IPO as decisions in the company are taken by its board, not by the
government, which will hold 95% of the stake after the public issue.

Also Read | LIC IPO: Key points you should know

Speaking on the profitability of LIC, Kumar said,
“The profitability of any insurance company is different from others. Our
surplus was more than Rs 50,000 crore, but 95% of it was going to
policyholders. Going forward, the surplus distribution changes from 95% to 90%,
so profitability will also increase gradually”.

He stated that LIC was developing new products including
some participating (par) and non-participating (non-par) policies, which would
be released in the future.

Also Read | LIC IPO: here’s how policyholders can participate

Chairman said that LIC may not sell its entire stake in
IDBI Bank and can use its large network of branches to market its insurance
services.

IDBI bank has been the strongest contributor to the
bancassurance channel for LIC and he would personally like to have some stake
in it, said Kumar. On the other hand, the government is expected to commence
the stake sale process soon.

The government of India and LIC hold over 90% stake in
IDBI Bank, which had assets of over Rs 2.91 trillion ($38.91 billion) at the
end of December and more than 1,800 branches across the country. LIC acquired a
lender when it was weighed down by bad loans and needed a new infusion of
capital.

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For the past few years, the government and LIC have been
looking at diluting their stake in IDBI Bank.

On October 23, 2019, the insurer advanced Rs 4,743 crore
to IDBI Bank using policyholder funds, and the bank further raised Rs 1,435.1
crore on December 19, 2020, through QIPs.

LIC filed the draft prospectus with the SEBI this month
to sell a 5% stake to raise about $8 billion, making it the largest IPO in
India so far. LIC’s IPO is expected to receive regulatory approval by the first
week of March after which an indicative marketing price band will be set.