The Life Insurance Corporation of India (LIC), a state-owned insurance giant, is set to make history with its initial public offering (IPO) launching on May 4, 2022. This IPO, valued at ₹21,000 crore, is poised to be the largest in Indian stock market history. The price band for this public issue, which will close on May 9, 2022, is set between ₹902 and ₹949. Notably, the entire IPO is an offer for sale (OFS) by the Government of India, which will divest a 3.5% stake, equating to 22.13 crore shares.
In a strategic move to engage retail investors, LIC has reserved 10% of its approximately 2.21 crore shares for policyholders. Additionally, 15.81 lakh shares (0.7%) are reserved for LIC employees. One of the key attractions of this IPO is the discounts offered to these groups, which are designed to incentivise participation.
For eligible policyholders, there is a significant discount of ₹60 per share, contingent upon their PAN card being linked to their LIC policy. Employees and retail investors will receive a ₹45 discount per share. This initiative aims to reward LIC's existing customers while encouraging a broad spectrum of retail investors to participate in the IPO.
The market lot size for the LIC IPO is set at 15 shares, with retail investors permitted to apply for up to 14 lots. That means a policyholder can invest a substantial amount while still enjoying the discounts on the share price.
For those policyholders who are also employees of LIC, they can apply under three distinct categories:
As LIC boasts around 25 crore policyholders, this generous allocation aims to make the IPO accessible to a significant number of individuals.
In order to apply under the policyholder reservation category and avail themselves of the discount, it is essential for policyholders to link their PAN with their LIC policy. If the PAN is not linked, policyholders can still participate under the retail investor quota, though they will only qualify for a ₹45 discount.
The effective final price after applying the discounts for each category is summarised below:
To access the LIC Policyholder Reservation Portion, it is crucial that the Demat account linked to the application matches the PAN associated with the LIC policy.
In cases where there are joint LIC policies, only the primary account holder can apply for the IPO under the Policyholder Reservation Portion. Furthermore, policyholders with lapsed LIC policies can still apply through this reservation portion.
Opening a Demat account is a fundamental step for new investors interested in participating in the LIC IPO. Institutions like HDFC Bank offer fast, simple, and hassle-free processes for setting up a Demat Account, allowing investors to focus on their investment journeys without unnecessary complications.
You can click here to open a Demat Account now!
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice before you take any/refrain from any action.