What is LIC IPO In Nutshell | How to Buy LIC IPO | LIC IPO Shares Today

Post covid it is raining IPOs in India. And India has welcomed the biggest IPO of none other than the IPO of Life Insurance Corporation of India. The LIC IPO is about INR 21,000 crore.

The IPO bidding window was open from 4th May up to 9th May. The expected share value would range between INR 902 – and INR 949.

If you want to know what is lic ipo in nutshell. LIC is one of the country’s oldest and largest insurance firms. On 1st September 1956, LIC had an initial capital of INR 5 crore.

LIC was formed by merging and nationalizing almost 245 private and life insurance companies. Being the largest insurance company, LIC manages almost INR 40 lakh crore assets. LIC is the largest insurance firm in India and the fifth-largest insurance of the world.

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1. LIC Umbrella

As of 31st December 2021, LIC covered almost 91% of all the districts. LIC had almost 1.33 million individual agents. The market share of LIC in terms of premiums or GWP was almost 61.4 percent while in terms of Business Premium was almost 61.6%.

The market share in terms of Individual policies issued was 71.8% while the number of group policies was 88.8%.

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2. LIC IPO

Government has a stake of almost INR 22.13 crore which is almost 3.5% of the total value. The government is selling 3.5% of its stake in LIC. The IPO is an offer for sale which is OFS.

The government plans to raise almost INR 21,000 crore through the sale. Pre Ukraine invasion by Russia, the LIC IPO was supposed to be INR 65,000 crore.

It was sustained by foreign portfolio investors which had a net worth of INR 1.48 crore since the beginning of December 2021.    

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3. Distribution Of LIC Stakes

LIC has announced a discount of INR 60 per share for its policyholders while INR 45 per share for LIC employees and retail investors. Qualified Institutional Buyers have a reserve of almost half of the issue size.

Out of the remaining issue size, 35% is for retail investors while 15% is reserved for non – non-institutional investors.

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4. LIC Bid Lot

The bid lot size of LIC is 15 equity shares. It can be bid in multiples of 15 after that. With the upper band price, the shelling price is INR 14,235 for one lot of LIC. This price does not include the discounts. LIC shares will be listed on NSE as well as BSE.

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.

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5. Anchor Investors

The anchor investors for LIC are ICICI Prudential Life Insurance, SBI Life Insurance, Kotak Mahindra Life Insurance, PNB MetLife Insurance, SBI Pension Fund and UTI Retirement Solutions Pension Fund Scheme, Axis Capital Limited, Government of Singapore, Goldman Sachs (India) Securities Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, Monetary Authority of Singapore, BofA Securities India Limited, Government Pension Fund Global, Citigroup Global Markets India Private Limited, ICICI Securities Limited, JM Financial Limited, J.P. Morgan India Private Limited and SBI Capital Markets Limited, Kotak Mahindra Capital Company Limited, and BNP Investment LLP and some other too.

Almost 123 anchor investors have taken the total shares of 5,92,96,853 at INR 949.

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The main anchor investors are Government Pension Fund Global, a sovereign wealth fund of Norway that has almost 4% of the anchor investor portion.

The government of Singapore holds approx. 2.7% of the anchor investor portion while the Monetary Authority of Singapore has 0.68% of the anchor investor portion. BNP Investments LLP also has a share of 8% in the anchor investor portion.

From the anchor investor allocated, the anchor book came from 15 domestic mutual fund houses. It was through 99 different schemes and contributed almost INR 4,002 crore at an allocation rate of INR 949 per share.

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6. Eligibility For LIC IPO For Policyholders

The share shall be available for the policyholders under certain criteria. In the Draft Red Herring Prospectus filed with market regulator Sebi, LIC has informed the public that policyholders need to check the criteria if they wish to apply under the policyholder quota.

The foremost requirement is to open a Demat account to apply for IPO. Then the LIC policyholder who has linked their PAN with the insurance policy as of 28 February 2022, will be eligible to apply under policyholder quota.

LIC policyholders whose policies are matured or surrendered as per records shall not be eligible for applying for IPO. Even in case of the policyholder’s death and the claim has been settled would also not be eligible for LIC IPO.

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7. Non-Eligibility for LIC IPO For Policyholders

NRIs would not be able to apply for the LIC IPO Policyholder Reservation Portion. This is reserved only for Indian citizens. LIC policyholders with policies other than group policies will be eligible to bid for LIC IPO under the policyholder quota.

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8. Buy LIC IPO Shares

These days any IPO or shares need to be traded through a Demat account. You can open your Demat account with any of the brokers available. The brokers available in the market are Zerodha, Groww, and Upstox. If you want, you can also use the platform of any other depository participant to book the IPO.

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9. LIC IPO In Nutshell

1. LIC IPO is worth INR 21,000 crore and it is India’s highest-value public issue to date.
2. Approx. 15.81 lakh shares are reserved for employees and almost 2.21 crore shares are reserved for policyholders.
3. The LIC share price ranges between INR 902 to INR 949.
4. The lot size of LIC IPO is 15 shares. You can apply for one lot to a maximum of 14 lots.
5. With the lot size of 15 shares, the approximate amount to be shelled is INR 14,235 with the upper cap of the share price.
6. A discount of INR 60 is announced for policyholders while INR 45 is for LIC employees who are applying for the public issue.
7. 10% of the offered size shall be reserved for the LIC policyholders and 5% is reserved for employee post-free equity share capital reserved.
8. Due to the Russia – Ukraine war the IPO launch was postponed to 4^th May which was earlier to be on 31^st March.
9. Anchor Investors have given a commitment of INR 13,000 crore
10. The government has sold its 3.5% stakes in the insurance giant instead of 5% as listed in the previous Draft Red Herring Prospectus.
11. The mega IPO aims to provide a significant contribution to the government’s disinvestment proceeds this fiscal. The Centre had pegged receipts at ₹65,000 crore – up from ₹13,531 crore in the last fiscal.
12. LIC IPO has been oversubscribed by almost 2.95 times.

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LIC IPO (Initial Public Offering): FAQ

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About Author

Anjali Astor

I am a freelance reporter covering Finance, Money and Investment in the U.S. and from around the World for The Bharat Sanssar. Broadly, this beat is about money and finance, which includes businesses and their companies’ use of the money they raise.

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