Chairman, MR Kumar said LIC has until November 2023 to make the switch if IDBI Bank does not find a buyer by then. Providing loans from IDBI Bank source for LIC Housing is therefore the second option, Kumar said.
“The central bank gave us a five-year time frame that ends in November 2023. If the IDBI divestment takes place before then, it doesn’t matter,” Kumar said. “The second option is that LIC Housing can source from IDBI Bank.”
LIC Housing is India’s second largest non-bank property financier, with a loan book of over Rs 2.43 lakh crore.
The Reserve Bank of India (RBI), while allowing LIC to acquire a majority stake in IDBI Bank, had said in 2018 that either IDBI Bank or LIC Housing Finance Limited will have to cease their housing finance business within five years. , because the housing finance activity must be carried out by a single entity.
LIC purchased a 51% stake in IDBI Bank in January 2019 by buying 827.5 million shares from the government. It further injected Rs 4,743 crore into IDBI Bank on October 23, 2019. LIC’s stake in IDBI has now fallen to 49.24% after Rs 1,435 crore was raised in a qualified institutional placement in December 2019.
Kumar said LIC would like to keep part of IDBI bank even if the government sells it.
“I would like to keep at least part of the stake because when we bought it we considered it a strategic stake. IDBI Bank is now the biggest bancassurance channel for us, so we want that relationship to continue. “, Kumar said.
IDBI Bank is also part of the government’s divestment program in addition to the mega sale of Rs 65,000 crore shares in LIC. The government plans to sell 5% of its stake in the insurance giant.
Kumar said he expects LIC to be listed before the end of the fiscal year ending in March. He also said more than 7 million policyholders had linked their plans to demat accounts in anticipation of the stock award. About one-tenth the size of the LIC issue was reserved for policyholders. LIC employees and policyholders will be offered a discount on the issue price.
Kumar said people holding policies through February 13, the filing date of the Red Herring Draft Prospectus (DRHP), will be eligible.
Dipam’s appointed actuarial firm, Milliman Advisors, pegged the company’s intrinsic value (EV) at Rs 5.39 lakh crore, down from Rs 95,605 crore at the end of March 2021, mainly due to an increase in the shareholder interest in the non-participant. 100% funds.
Previously, LIC had a single fund, and the valuation surplus from participating (at par) and non-participating (at par) business was split between policyholders and shareholders in a ratio of 95:5. Participatory policies allow investors to participate in the profits generated by investments. These could be insured returns or ULIP plans. Non-participating plans are where there are no profits generated like term plans.
Prior to the IPO, an amendment to the Life Insurance Company Law transferred all excess non-participating funds to shareholders and the ratio of participating business will eventually be reduced to 90:10, according to the companies private sector insurance by FY25.
“We plan to increase the share of non-participatory policies in our portfolio in the future. Changing products, our digitization and expanding channels will help us in the future,” Kumar said.
LIC has a network of 58,000 branches and thousands of agents. It holds more than half of the shares of a market that remains largely under-penetrated.
Kumar said the company plans to add a new digital vertical to its operations to expand its footprint and sell more fonts online.