LIC IPO: A few aspects you should know

Hyderabad: Insurance behemoth, Life Insurance Corporation of India’s initial public offering (IPO) will open on May 4. The government owns 100 per cent stake in LIC, whose total equity is around 632 crore shares. The issue size of the IPO is 22.13 crore shares, which is 3.5 percent of the total number of shares. Its […]

Hyderabad: Insurance behemoth, Life Insurance Corporation of India’s initial public offering (IPO) will open on May 4. The government owns 100 per cent stake in LIC, whose total equity is around 632 crore shares. The issue size of the IPO is 22.13 crore shares, which is 3.5 percent of the total number of shares. Its valuation is at Rs 6.07 lakh crore.

The price band for the initial public offering (IPO) of (LIC) has been set at Rs 902 to Rs 949. The government aims to raise about Rs 19,575 crore to Rs 21,257 crore via the IPO.

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Here are a few things to know

Discount

Policyholders will get a Rs 60 discount. Retail investors as well as employees will get a Rs 45 a discount. To get the shares at a discount, the policyholders should have already linked their policies to the PAN. Allocation will be in lots of 15 shares. At the higher end, the price will be Rs 14,235. Policyholders, who have linked the policies to PAN, will get them for Rs 13,335. Bids can be made in multiples of 15 equity shares.

Reservations

There is an employee reservation of 15.81 lakh shares while 2.21 crore shares are reserved for policyholders. The policyholder reservation portion will not exceed 10 percent of the issue size. Retail and employees will get a Rs 45 discount, while policyholders will get a Rs 60 discount. Retail investors will get 35 percent of the shares.

Limit

The maximum bid amount under policyholder, retail and employee quotas cannot exceed Rs 2 lakh (net of the discount). However, if one is a retail investor, also a policy holder as well as an employee, then they bid under all three categories separately. So, the effective aggregate limit will be Rs 6 lakh.

According to the draft red herring prospectus, individuals with even one LIC policy as on February 13 and the bid or offer opening date can apply under the policyholder reservation portion if they have linked policy with PAN. Failing this, a policyholder won’t be able to apply under policyholders’ category. Those covered under group policies will not be eligible to apply under this quota.

Demat

Like for all IPOs, having a demat account is mandatory to participate

investors can bid for shares in a lot size of 15 shares and in multiples thereof. At the upper range of the price band, one lot of LIC will be worth Rs 14,235

Allotment

Shares will be allotted to successful bidders on May 12. Refunds to unsuccessful bidders will be credited on the next day. Shares will be credited to the demat account by May 16 and the stock is expected to list on the bourses on May 17.