The Ministry of Finance, India has proposed to reserve 10% of the size of total LIC IPO for bidding for existing LIC policyholders.
Life Insurance Corporation (LIC) has already filed draft papers with Securities and Exchange Board of India (SEBI) for the sale of a 5% stake by the government.
The initial public offering of more than 31.6 crore shares or 5% of government stake is likely to hit the D-street in next month (i.e. March 2022). LIC has reserved up to 5% of the LIC IPO for its eligible employees and up to 10% for its policyholders.
Those LIC policyholders who wish to bid under the reserved quota, have to link their LIC policy with PAN number. The last cut-off date announced by LIC is 28th February for linking the policy with the PAN. If policyholders fail to abide by the timeline, they would be deemed ineligible to apply for the IPO under the reserved quota.
LIC policyholders as well as employees will be given a discount on the floor price. The amount of the discount will be communicated at least 2 days prior to the bid opening.
Expected price for LIC IPO
The expected value per share for LIC IPO will range from Rs. 2,560 to Rs. 3,413 for the multiple of 3x and 4x, respectively. The value per share at the conservative multiple 2x and 2.5x comes to Rs. 1,706 and Rs. 2,133 respectively as per a recent report by Business Today.
What is the date of LIC IPO?
The LIC IPO is expected to open on March 11, 2022 for subscription. 10% out of the total shares have been reserved for the policyholders of LIC exclusively.
Is it mandatory for policyholders to have a demat account if they want to apply for shares in the offer?
Yes. According to the SEBI ICDR Regulations, no company can issue any equity share in physical form and the equity shares can only be issued in a dematerialized form. Therefore, whether policyholders or retail investors, any one should have a demat account to apply for shares in the offer.
What is the lock-in period for the shares purchased via the Policyholder Reservation Portion?
There is no lock-in period. The policyholders can sell their Equity Shares immediately on listing of the Equity Shares.
Can policyholders of any Life Insurance apply under the Policyholder Reservation Portion category?
No, only Life Insurance Corporation (LIC) policyholder can bid under the Policyholder Reservation Portion. However, other life insurance policyholders can apply under RIB or Non-Institutional Bidders category.
Do I need to keep any minimum balance of equity shares in the demat account?
No. There is no minimum balance requirement in demat account.
Can I apply for shares for more than Rs. 2,00,000)?
No, as the maximum bid amount is limited to Rs. 2,00,000 (net of Policyholder Discount, if any), you cannot do so.
I am having an LIC policy in a lapsed condition. Am I still eligible for reservation under the Policyholder Reservation Portion?
Yes. All policies that have not exited the records of corporation by way of maturity, surrender or way of death of the policyholder are eligible.
Is a nominee under a policy issued by the Corporation eligible to Bid under his/her name?
No, only eligible policyholders are eligible to bid.
Can NRI policyholders apply in the offer?
No, only Indian resident can apply.
Can senior citizens apply in the offer?
Yes. There is no age restriction to apply. All eligible policyholders are eligible.