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LIC IPO | How can policyholders invest in the mega listing?

LIC reserves up to 10% of offer size for policyholders

May 02, 2022 / 04:32 PM IST

The Life Insurance Corporation of India (LIC) has decided to reserve up to 10 percent of its much-awaited IPO offer size for policyholders.

The Rs 21,000-crore IPO, which will be India’s largest, will open for subscriptions on May 4 and close on May 9, with anchor investment opening on May 2. The central government was originally slated to offload 5 percent of its stake in the company, but it brought down the stake sale on offer to 3.5 percent. The price band is set at Rs 902 to Rs 949 per equity share. Policyholders will get a discount of Rs 60 per share, while employees and retail investors will be entitled to a lower discount of Rs 45.

“Policyholders have also made this company. We now invite them to be shareholders. We want to invite millions of Indians to participate in this process, as LIC unlocks its value,” said Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM).

How can policyholders apply?

Out of the 221.37 million shares that will be offered for sale, the life insurance behemoth will reserve nearly 22.14 million, or 10 percent, for policyholders. Another 1.58 million shares, or 0.7 percent, will be part of the employees’ quota. Bids can be made in multiples of 15 equity shares.

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

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Also read: Fair and attractive LIC IPO valuation to draw retail investors significantly, says DIPAM secretary

“Bids by eligible policyholders may be made at cut-off price…only those bids, which are received at or above the offer price, net of the policyholder discount would be considered for allocation under this portion,” the red herring prospectus filed with the Securities and Exchange Board of India (SEBI) on Wednesday (April 27) read. A policyholders quota is a unique, first-of-its-kind offering.

Also read: LIC to reserve up to 10 percent of issue size or policyholders in its IPO

According to the draft red herring prospectus (DRHP) filed back in February, individuals with even one LIC policy as on February 13 (the date on which the DRHP was filed) and the bid or offer opening date can apply under the policyholder reservation portion. The last date for linking your policy with your PAN was February 28.

Those covered under group policies will not be eligible to apply under this quota.

Keep in mind that having a demat account is mandatory to participate in IPOs. And, as a policyholder who wishes to apply for LIC’s IPO, you should be the first account holder in your demat account. If it is joint account, then you should be the first or primary holder.
Preeti Kulkarni is a financial journalist with over 13 years of experience. Based in Mumbai, she covers the personal finance beat for Moneycontrol. She focusses primarily on insurance, banking, taxation and financial planning
Jash Kriplani is a journalist with over ten years of experience. Based in Mumbai. Covering mutual funds, personal finance. His last stint was with Business Standard, where he covered mutual funds and other developments in the financial markets
first published: Apr 27, 2022 04:04 pm
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