The much-awaited Initial Public Offering (IPO) of the Life Insurance Corporation of India will open for investors on Wednesday and will remain open to subscription till May 9. A landmark public issue in the history of the Indian capital market, it is poised to be India's biggest IPO till date.
Here's all you need to know ahead of the historic IPO:
Subscription dates:
The subscription opens on May 4 and will remain open till May 9.
Price band:
The indicative price range has been set at Rs 902 to 949 per share, with Rs 5,620 crore worth of shares set aside for anchor investors. The anchor investor portion of LIC's initial public offering has been subscribed fully at Rs 949 per share.
Who can buy these?
The government is selling 22,13,74,920 shares in LIC targeting to raise about Rs 21,000 crore. The issue would open for institutional and retail buyers.
Of the over 22.13 crore LIC shares on offer, over 9.88 crore shares are reserved for qualified institutional buyers and over 2.96 crore shares for non-institutional buyers. Up to 15,81,249 shares and 2,21,37,492 shares are reserved for employees and policyholders.
NRI policyholders and policy holders who do not reside in India are not eligible to apply for the IPO under the portion reserved for policyholders.
Under the Policyholder Reservation category, if it is a joint holder policy, only one of the two can apply for the equity shares.
What's on offer for policyholders and employees?
While retail investors and LIC employees will get a discount of Rs 45 per share, LIC policyholders bidding in IPO would get a discount of Rs 60 a share.
What is the market value of the insurer?
LIC's embedded value, which is a measure of the consolidated shareholder's value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
Based on investor feedback, the market value of government-owned LIC has been pegged at 1.1 times its embedded value or Rs 6 lakh crore.
What is the least number of shares you can buy?
The shares are categorised into lots of 15 shares each and the minimum bid a 1 lot or 15 shares and in multiples of 15 equity shares thereafter.
Why did the government lower its issue size?
The government in February had planned to sell a 5 per cent stake or 31.6 crore shares in the insurance behemoth and had filed draft papers with Sebi. However, the IPO plans faced headwinds from the ongoing market volatility due to the Russia-Ukraine war.
Last week, the government decided to lower the issue size to 3.5 per cent. The government has also filed papers with Sebi seeking exemption from the 5 per cent stake sale norm, sources said.
According to Sebi norms, companies with a valuation of over Rs 1 lakh crore have to sell a minimum 5 per cent stake in the IPO.
Most importantly, how can you invest in these shares?
Policyholders who have linked their PAN, and retail investors are eligible to participate in the IPO, provided they have a demat (or dematerialised) account.
Individual policyholders cannot bid for more than Rs 2 lakh.
Most banks and brokerage applications let you subscribe to these shares using your demat account and bank details. You can either log into your net banking account or investment apps such as Groww, Zerodha etc. While the individual navigation in each of these processes will be slightly different, the LIC IPO option will likely be under the IPO/ e-IPO section the investment tab.
It will ask you to fill your required details such as name, investor category, number of shares etc. You will also be asked to fill in bid price or the offer price. Before you submit your bid, please read the offer document carefully as investments are subject to market risks.
Once everything is set and you've hit submit, confirm the bank payment mode on your banking or UPI app.
How will I know how many shares are allotted?
You will know how many shares have been alotted on the day the allotment is announced. As per the final papers filed with Sebi, the allotment of shares to the demat account of bidders will happen by May 16. The IPO will list for trading on May 17.
(With agency inputs)
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