LIC IPO on May 4: With attractive discounts and a 10 per cent reserved portion for policyholders, the LIC IPO is already exciting for this category of investors
LIC IPO: The wait is almost over for investors across India as the country’s most awaited initial public offering, or IPO, is opening in a few hours. India’s largest insurance company, Life Insurance Corporation (LIC) will open its initial share sale for the public on Wednesday, May 4, which is today. The LIC IPO has been looked forward to ever since the government announced it, and is expected to bring a new buzz to Dalal Street as it gears up for the same. The uniqueness of LIC IPO, which is likely to garner Rs 21,000 crore at the upper end of the price band, lies in its benefits for eligible policyholders.
With attractive discounts and a 10 per cent reserved portion for policyholders, the LIC IPO is already exciting for this category of investors, many of who are first-time investors. Here is a list of the key things LIC policyholders, who want to invest in the LIC IPO today, must know.
When is LIC IPO Opening?
LIC IPO is opening today, on May 4, and is going to remain open for bidding till May 9. The anchor investing option has already opened on May 2, with the portion getting oversubscribed due to strong demand.
Read More: Stocks to buy today: List of 20 stocks for profitable trade on May 4
LIC IPO Anchor Investments
Ahead of the launch of the LIC IPO, the insurer raised Rs 5,627 crore from anchor investors on Monday. Society Generale, Government Pension Fund of Norway, Government of Singapore, Monetary Authority of Singapore, and BNP Investments, are among the foreign funds that are invested. Meanwhile, 71 per cent of the total allotment was made to domestic mutual funds (MFs), which shows a disclosure by the company. About 42.17 million shares were allotted to 15 domestic mutual funds, including SBI, ICICI Prudential, HDFC, Aditya Birla, Axis, Nippon, and UTI. HCL Corporation, NPS Trust, PNB Metlife, and Bajaj Alliance General Insurance were some of the other anchor investors.
LIC IPO for Policyholders: Who is Eligible?
In its Draft Red Herring Prospectus (DHRP) filed with market regulator Sebi, LIC has said that policyholders need to check certain criteria to be eligible to apply under the policyholder quota. First of all, all policyholders need to open a demat account to apply for the IPO.
Secondly, LIC policyholders whose PAN is linked to the insurance policy as of February 28, 2022, will be eligible to apply for the LIC IPO under the policyholder quota, the company has said in its regulatory filing.
Apart from this, all policies that have not exited LIC records due to maturity, surrender, or the policyholder’s death are eligible for reservation under the Policyholder Reservation.
LIC IPO for Policyholders: Who is Not Eligible?
NRIs cannot apply for the IPO via the Policyholder Reservation Portion as only an Indian citizen can only apply for the LIC IPO. Meanwhile, all LIC policyholders with policies other than group policies are eligible for bidding in the policyholder quota.
Read More: FabIndia, Aether Industries, 5 others get Sebi’s nod to float IPOs
LIC IPO: Discount for Policyholders
The LIC IPO price band is fixed at Rs 902 to Rs 949 per equity share. However, for policyholders, there is a discount of Rs 60 per equity share. Therefore, at the upper end of the price band, LIC policyholders need to pay only Rs 889 per share to invest in the LIC IPO. It must also be noted that LIC policyholders can place a maximum bid of Rs 2 lakh for the issue.
How to Buy LIC IPO Shares?
Investors who wish to buy shares during the LIC IPO can use different brokerage apps like Groww, Upstox and Zerodha or use the platform of any other depository participant (DP) to book the issue. A step-by-step guide is provided here.
Should You Subscribe to LIC IPO?
“While LIC valuations appear to be cheap as compared to listed private players investors need to keep in mind that LIC has a lower VNB margin of 9.9% in FY2021 as compared to private players who have VNB margins of 22-27% due to higher share of participation & group product. Despite lower margins and inferior business mix, we believe that the IPO is being priced reasonably and offers value to investors with a long-term view,” said Yash Gupta, equity research analyst at Angel One.
