‘We want to tell our growth story to investors'
Business Today|December 12, 2021
M.R. Kumar, Chairperson of Life Insurance Corporation of India, in a free-wheeling chat, opens up about how the giant is getting ready for its bumper listing, among other things
Sourav Majumdar and Anand Adhikari

He is a busy man. As Chairperson of the Life Insurance Corporation of India (LIC), M.R. Kumar, 61, is preparing the insurance giant for an IPO. The public listing will make LIC one of the most valued companies in terms of market capitalisation. And Kumar, who took charge in March 2019, will leave office by March 2022, the deadline for taking LIC public. In an interaction with Business Today’s Sourav Majumdar and Anand Adhikari, Kumar talks about how the insurance giant is gearing up for the IPO, the changes expected after the listing, and the way ahead. Edited excerpts:

Q: Under your leadership, LIC will create history in its 65-year journey by listing on the stock exchanges. What will be your investment pitch?

A: We have to build a growth story. We have been growing despite competition from the private sector. We must tell investors that this is what we have done after the insurance sector opened up... how we have been holding on to market share and growing year after year. Going forward, we will do the same thing, and also differently, to add value for the shareholders. We are the world’s third best-known brand, as per a recent study. LIC is the only Indian brand featured in that study, which gave it a valuation of $24 billion. Nowhere in the world after opening up the insurance sector will you find a PSU (public sector undertaking) or government-owned entity holding on to its market share (we hold 60-70 per cent). As a PSU, we are different. We have plans to expand globally.

Q: The public listing is likely to see LIC rubbing shoulders with RIL, TCS and HDFC Bank in terms of market capitalisation. What will be the big change once you list?

A: I put it this way. We were always very competitive [but] we will become far more competitive because we will have a different set of people who are going to invest in us. We need to ensure that they get value for their investment. That is going to be a big change. It’s like getting married. Once we get the first thing [listing] done, then we know where we stand. After that, we will have to work on how we are going to benchmark ourselves... probably [against the] top insurance firms across the globe. That is the way to go.

In terms of size, there are a couple of Chinese insurance companies [like] China Life Insurance… [and] Ping An Insurance... They are doing very well on the digital side. Digital transformation is something that we are also doing.

Q: There seems to be a lot of froth in the IPO market. Some companies that have been incurring losses without any clear path to profitability are commanding massive valuations. How do you look at that as you head towards an IPO?

A: There are two ways of looking at valuations. One is the intrinsic value of the company and the brand. The other is the future growth story for the company. We have 250 million customers in a country of 1.25-1.3 billion people. That is the journey left to be covered. Therefore, there is a growth story. Maybe some [companies] do not get that kind of [profits]. But people are still investing and it is growing the froth that you talk about because people believe that there is a growth phase and it is going to happen in the future. I don’t mind waiting. I’m not looking for listing gains. I am interested in investing in an entity that is going to give me good value over time.

Do you remember the year 2000 when we had Y2K? We had a lot of start-ups then, especially IT companies. Some may have fallen by the wayside, but many continue to persist. Now they have fantastic valuations. So, there was a growth story.

Q: What is the morale like, and what work has been done since your IPO was announced?

A: It’s a very exciting time and the morale is very high. We have a group of 100 people working with us right from the day of the IPO announcement. We had SBI Caps and Deloitte as advisors. Subsequently, we have got 10 book-running lead managers. We have experts from within the organisation as well because that is very much required. There are experts from investment, marketing and finance. We have a dedicated IPO cell called Project Management Unit headed by an ED, and different sets of people are given different tasks based on what the bankers and legal counsel want us to do. We have Milliman, a very well-known international firm, helping us to find out the embedded value (EV). There were huge challenges initially because our database is humongous. Now, to run through all the products of our 280 million policies itself was a humongous exercise. So slowly, but surely, we are getting there. And once the EV is determined, after that the rest of the work will happen. But simultaneously, of course, we are working on things like DRHP (draft red herring prospectus).

Q: How complicated or challenging is this exercise to calculate the EV?

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