LIC weighs NSE IPO strategy: CEO says market conditions, valuation to decide final move

Life Insurance Corporation of India (LIC) does not see an immediate need to sell its 10.72% stake in the National Stock Exchange (NSE) as part of the bourse’s proposed initial public offering, though a final decision will depend on valuations and market conditions closer to the listing, MD and CEO R Doraiswamy said.

LIC had initially considered participating as a seller in the proposed offer for sale, Doraiswamy said, adding that the circumstances have since changed.  

“We are a large financial institution and we need to invest our monies in a secure as well as prudent way. So as and when this IPO gets released based on the valuation based on the market conditions then we will certainly be taking a call,” he said in an exclusive interaction with Business Today.  

“Initially we were even planning to be part of the offloading of stake in that but having achieved because NSE having achieved what is required to be offloaded to be compliant with the purpose for which this IPO which is an OFS coming up, I don't think we need to be partaking part as a seller but we will be taking a call close to that date based on the emerging situation, the market condition and the valuation.”

The comments come as the state-owned insurance giant marks 70 years of operations while navigating intensifying competition, changing customer preferences and a major digital transformation.  

Room to raise HDFC Bank stake

Doraiswamy said LIC’s investment decisions are primarily driven by the need to protect policyholders’ money and generate appropriate risk-adjusted returns. The insurer has equity investments in more than 350 companies and is one of the country’s biggest domestic institutional investors.

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On whether LIC could deepen its holding in HDFC Bank, Doraiswamy said the insurer has room to raise stakes in companies where it has not reached regulatory limits. However, such decisions would depend on valuations and the long-term investment opportunity.

“There is a possibility of enhancing the stake in any organisation up to the limit which is allowed under the regulations. So we still have a possibility of enhancing that stake because we have not reached the regulatory permitted limit in that particular scrip,” he said.

“We have the liberty or we have the flexibility to increase our stake in some organisations as you mentioned but it has to be a case to case call based on the underlying valuation underlying opportunity that is available under scrip,” he added.

Focus on sustaining growth

Doraiswamy also expressed confidence in sustaining improvements in LIC’s key financial metrics after a strong first-quarter performance, while stopping short of giving formal guidance.

Value of new business (VNB), he said, is influenced by factors including product mix, operational efficiency, demographic experience and economic parameters such as risk-free rates.

“In all practical possibility we are looking at, though we don't normally give any guidance, we look at working towards maintaining or sustaining this kind of an improvement given the market uncertainty in terms of rates which only time will tell,” he said.

On LIC’s share price performance, Doraiswamy said the insurer has either met or exceeded several commitments made at the time of its IPO, including improving its product mix, distribution channel mix and VNB margins. He also pointed to the increase in LIC’s public shareholding following the latest offer for sale.

“So I don't see any reason why the price should not be improving in the days to come and it should follow the pattern of the industry,” he said.

Health insurance deal not an immediate priority

LIC is also keeping the door open for strategic investments in health insurance and technology, but there is no immediate need to conclude a transaction.

“As of now we don't have an immediate need for any such strategic investments to be finalized but we are open and we are looking for opportunities as and when they present a good opportunity which will give us long-term value growth for the investment as well as give us the best possible exposure or expertise in taking this forward,” Doraiswamy said.

LIC had begun exploring health insurance investments amid expectations of legislative changes that could allow composite licences. With that change not materialising, the urgency for such an investment has diminished.

AI at the heart of digital transformation

Artificial intelligence will be a key part of LIC’s digital transformation. The insurer has already deployed conventional AI in areas including its chatbot and is evaluating generative and agentic AI for wider use in customer service, underwriting and claims.

“We consider artificial intelligence as a very important enabler in any digital transformation process,” Doraiswamy said.

LIC is also building a data lakehouse, currently in the final stages of construction, to provide the infrastructure for greater AI adoption. Doraiswamy stressed that data privacy, security, governance, auditability and traceability would remain important considerations as LIC expands the use of the technology.

Looking further ahead, he said LIC intends to retain its leadership in life insurance while delivering sustainable growth and creating value for policyholders and shareholders, as it transforms itself into “the most preferred insurer of the nation”.

Catch the full conversation here: