The highly-anticipated initial public offering (IPO) of insurance behemoth Life Insurance Corporation (LIC) of India will finally open for subscription today. The IPO, which is touted to be the country’s largest-ever public issue, will see the government selling a 3.5% stake in the insurer, lower than the earlier offer of 5%, comprising 22.13 crore shares of ₹10 face value. The government is expected to raise around ₹21,000 crore through the issue at the upper end of the price band of ₹902-949 per share.
The IPO is completely an offer for sale (OFS), under which 10% of the shares are reserved for LIC policyholders, 0.7% for the company’s employees, and 31.25% for household (retail) investors. After policyholders and shareholder reservations, the remaining lot will be allocated in the ratio of 50% for qualified institutional buyers (QIBs), 35% for retail investors, and 15% for non-institutional investors (NIIs). A total of 60% of QIB shares have been reserved for anchor investors.
Ahead of the IPO, LIC of India raised over ₹5,600 crore through anchor investors, which received strong participation from domestic mutual funds as well as foreign fund houses. The insurer allotted around 59.3 million shares to 123 anchor investors at Rs 949 apiece, of which more than 70% comprises of domestic mutual funds such as SBI Mutual Fund, SBI Life Insurance, ICICI Prudential, Nippon Life, Kotak Mahindra Life Insurance, L&T Mutual Fund, Aditya Birla Sun Life, Axis Mutual Fund, HDFC Trustee, Tata Investment Corporation, UTI Mutual Fund, Sundaram Mutual Fund. The key foreign investors which participated in the anchor book included the Government of Singapore, Government Pension Fund Global, BNP Investments LLC, Monetary Authority of Singapore, Societe Generale, Invesco India, and Saint Capital Fund.
Here are key things to know before investing in LIC IPO:
The country’s biggest-ever LIC IPO will open for subscription on May 4 and will close on May 9.
The government will sell 22.13 crore (221,374,920) shares at a price band of ₹902-949 apiece. At the upper price band, total issue size stands at ₹21,008.5 crore.
The IPO proceeds will be used to achieve the benefits of listing of shares on domestic stock exchanges.
Investors can subscribe to the LIC IPO in a lot of 15 equity shares, which means a bidder can invest in a minimum of 15 shares, and in multiples of 15 thereafter. A maximum 14 lots can be applied as LIC has set an investment limit of ₹2 lakh for one investor.
In terms of reservation, 10% of the issue size or 2.21 shares will be allotted for LIC policyholders, 0.7% to employees, and 31.25% for household (retail) investors. The quota for qualified institutional buyers has been fixed at 50%, while retail investors can bid for 35% shares and the remaining is reserved for non institutional buyers.
The share allotment for LIC IPO is expected to be done on May 12, while shares are likely to list on the BSE and the NSE on May 17.
Who can apply for LIC shares?
As per the document filed with market regulator SEBI, policyholders and employees of the state-run insurer can take part in the subscription process subject to certain conditions. All policyholders that have not exited LIC’s policies on or before the date of the prospectus (13 February) can apply for LIC shares.
LIC has reserved shares for its policyholder and the employees. Of the 22.13 crore issue size, over 2.21 crore shares and 15.81 lakh shares are reserved for the policyholder and the employees. Besides, 9.88 crore shares are reserved for qualified institutional buyers and over 2.96 crore shares for non-institutional buyers.
LIC employees and retail investors will get a discount of ₹45 per share, while LIC policyholders would get a discount of ₹60 apiece.
Here’s how to subscribe to LIC shares:
Investors willing to apply for the LIC's IPO need to have a demat account and UPI-supported platform to make the trade.
To apply for the IPO, one needs to complete the KYC process in advance.
Bidders will have to log-in to their online net-banking accounts and need to go to the investments section and click on the IPO/e-IPO option.
After selecting the option, investors need to fill depository details and bank account details to complete the verification process.
After the verification process, investors need to select "Invest in IPO" and enter the number of shares and the bid price.
Finally, investors need to hit the “Apply Now” option and place their order.