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NEW DELHI: Life Insurance Corporation (LIC) will launch its initial public offering (IPO) on May 4, and close it on May 9. The price band has been set between Rs 902 and Rs 949. The issue will open to anchor investors on May 2.
The government will sell 3.5 per cent stake in LIC or 22.13 crore shares in the company and raise Rs 20,557.23 crore. This is well short of earlier projection of about Rs 60,000 crore.
Investors can bid for shares in a lot size of 15 shares, and multiples thereof. There is an employee reservation of 1.58 crore shares while 2.21 crore shares are reserved for policyholders.
Half of the shares are reserved for qualified institutional buyers (QIB), 15 per cent of the shares will be reserved for non-institutional investors while the rest is for retail investors.
The government has reserved 10% of the issue size for policyholders. They will get a discount of Rs 60, while employees and retail investors will get a discount of Rs 45.
The government is expecting major participation from retail investors.
Shares will be allotted to successful bidders on May 12, and the refund to unsuccessful bidders will be credited on the same day.
LIC will list on the stock exchanges on May 17.
Here is how you can apply for the LIC IPO under various categories:
Retail investors
Retail investors will be eligible to participate in 35% of the IPO issue size. These include both resident and non-resident Indians. The maximum bid of a retail investor cannot cross Rs 2 lakh.
LIC policyholders
Policyholders who have one or more LIC policies would be eligible to apply in the IPO under the Policyholder Reservation Portion. Policyholders must ensure that their Permanent Account Number (PAN) details are updated in the policy records of the Corporation at the earliest. Eligible policyholders will be able to apply for the “Policyholder Reservation Portion” at the cut-off price.
The maximum bid amount under the policyholder reservation portion by an eligible policyholder must not exceed Rs 2,00,000.
Joint LIC policyholders
Under the Policyholder Reservation Portion category, only one of the two policyholders can apply for equity shares. In the insurance records, the PAN number of the applicant bidding in the offer must be amended.
The applicant must have a Demat account in his or her own name. If the account is joint, the applicant must be the first/primary account holder.
NRI LIC policyholders
NRI policyholders and other policyholders who do not reside in India are not eligible to apply for the Policyholder Reservation Portion.
According to the LIC DRHP filed with Sebi, a policyholder who did not update his/her PAN before February 28, 2022 will not be eligible to participate in its IPO under the portion reserved for policyholders.
LIC employees
LIC employees can apply for the Employee Reservation Portion at a discounted price.
The maximum bidding amount under the employee reservation portion for an eligible employee must not exceed Rs 2,00,000.
Can a retail investor apply for LIC IPO if he is a policyholder?
Point to note: If you are an LIC policyholder, you are eligible to apply for the IPO in the retail category, but in that case you will not be eligible for the Rs 60 policyholder discount. You can then avail the retail investor discount.
“The maximum investment limit is Rs 2 lakh distinctly for applications under retail, policyholder, and employee categories. Thus, a policyholder can apply for shares worth a maximum of Rs 2 lakh under the policyholder category and an additional Rs 2 lakh under the retail category,” said Santosh Meena, head of research, Swastika Investmart.
What this implies is that an LIC policyholder can invest maximum Rs 4 lakh in an LIC IPO. He can invest Rs 2 lakh under policyholder category, and Rs 2 lakh under retail category.
If you are an LIC employee, your maximum investment amount is Rs 6 lakh ( Rs 2 lakh under LIC employee category, Rs 2 lakh under policyholder category, Rs 2 lakh under retail category).
Getting a Demat Account
You will need a Demat account if you wish to apply for the IPO. You can open a Demat account with a depository participant (DP).
A list of registered DPs is available online on the NSDL and CDSL websites.
To open a Demat Account, you will have to provide your PAN, address proof, cancelled cheque, photograph, and fees as applicable.
The government will sell 3.5 per cent stake in LIC or 22.13 crore shares in the company and raise Rs 20,557.23 crore. This is well short of earlier projection of about Rs 60,000 crore.
Investors can bid for shares in a lot size of 15 shares, and multiples thereof. There is an employee reservation of 1.58 crore shares while 2.21 crore shares are reserved for policyholders.
Half of the shares are reserved for qualified institutional buyers (QIB), 15 per cent of the shares will be reserved for non-institutional investors while the rest is for retail investors.
The government has reserved 10% of the issue size for policyholders. They will get a discount of Rs 60, while employees and retail investors will get a discount of Rs 45.
The government is expecting major participation from retail investors.
Shares will be allotted to successful bidders on May 12, and the refund to unsuccessful bidders will be credited on the same day.
LIC will list on the stock exchanges on May 17.
Here is how you can apply for the LIC IPO under various categories:
Retail investors
Retail investors will be eligible to participate in 35% of the IPO issue size. These include both resident and non-resident Indians. The maximum bid of a retail investor cannot cross Rs 2 lakh.
LIC policyholders
Policyholders who have one or more LIC policies would be eligible to apply in the IPO under the Policyholder Reservation Portion. Policyholders must ensure that their Permanent Account Number (PAN) details are updated in the policy records of the Corporation at the earliest. Eligible policyholders will be able to apply for the “Policyholder Reservation Portion” at the cut-off price.
The maximum bid amount under the policyholder reservation portion by an eligible policyholder must not exceed Rs 2,00,000.
Joint LIC policyholders
Under the Policyholder Reservation Portion category, only one of the two policyholders can apply for equity shares. In the insurance records, the PAN number of the applicant bidding in the offer must be amended.
The applicant must have a Demat account in his or her own name. If the account is joint, the applicant must be the first/primary account holder.
NRI LIC policyholders
NRI policyholders and other policyholders who do not reside in India are not eligible to apply for the Policyholder Reservation Portion.
According to the LIC DRHP filed with Sebi, a policyholder who did not update his/her PAN before February 28, 2022 will not be eligible to participate in its IPO under the portion reserved for policyholders.
LIC employees
LIC employees can apply for the Employee Reservation Portion at a discounted price.
The maximum bidding amount under the employee reservation portion for an eligible employee must not exceed Rs 2,00,000.
Can a retail investor apply for LIC IPO if he is a policyholder?
Point to note: If you are an LIC policyholder, you are eligible to apply for the IPO in the retail category, but in that case you will not be eligible for the Rs 60 policyholder discount. You can then avail the retail investor discount.
“The maximum investment limit is Rs 2 lakh distinctly for applications under retail, policyholder, and employee categories. Thus, a policyholder can apply for shares worth a maximum of Rs 2 lakh under the policyholder category and an additional Rs 2 lakh under the retail category,” said Santosh Meena, head of research, Swastika Investmart.
What this implies is that an LIC policyholder can invest maximum Rs 4 lakh in an LIC IPO. He can invest Rs 2 lakh under policyholder category, and Rs 2 lakh under retail category.
If you are an LIC employee, your maximum investment amount is Rs 6 lakh ( Rs 2 lakh under LIC employee category, Rs 2 lakh under policyholder category, Rs 2 lakh under retail category).
Getting a Demat Account
You will need a Demat account if you wish to apply for the IPO. You can open a Demat account with a depository participant (DP).
A list of registered DPs is available online on the NSDL and CDSL websites.
To open a Demat Account, you will have to provide your PAN, address proof, cancelled cheque, photograph, and fees as applicable.
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