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LIC IPO opening on 4 May: How policyholders can grab shares

India’s largest, the Rs 21,000-crore worth IPO, is opening for subscriptions on 4 May and closing on 9 May — with anchor investment opening on 2 May

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Even as the union government decided to reduce the extent of offloading state-held stakes of the Life Corporation of India (LIC) from 5% to 3.5%, the company has decided to reserve up to 10% of its much-awaited IPO offer size for policyholders. As LIC has been the most popular insurance company in the country over the ages, many may be interested to grow money by buying its shares, but an explanation of the procedure was hitherto not available in the public domain. It follows.

India’s largest IPO, the Rs 21,000-crore worth LIC IPO, is opening for subscriptions on 4 May and closing on 9 May — with anchor investment opening on 2 May — has a price band set at Rs 902 to Rs 949 per equity share. Policyholders will get a discount of Rs 60 per while employees and retail investors will be entitled to a lower discount of Rs 45.

“Policyholders have made this company. We now invite them to be shareholders. We want to invite millions of Indians to participate in this process, as LIC unlocks its value,” said Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM).

How LIC policyholders can apply

Out of the 221.37 million shares that will be on sale, the LIC will reserve nearly 22.14 million (10%) for policyholders. Another 1.58 million shares (0.7%) will be part of the employees’ quota. Bids can be made in multiples of 15 equity shares.

The maximum bid amount under the quotas of policyholders, retailers and employees cannot exceed Rs 2 lakh, which is the net of the discount. But a retail investor, who is a policyholder as well as an LIC employee, can bid under all three categories separately. The effective aggregate limit for such an investor will be Rs 6 lakh.

“Bids by eligible policyholders may be made at cut-off price…only those bids, which are received at or above the offer price, net of the policyholder discount would be considered for allocation under this portion,” the red herring prospectus filed at the office of the Securities and Exchange Board of India (SEBI) on today read. A policyholders quota is a unique, first-of-its-kind offering.

The draft red herring prospectus (DRHP) filed in February says that individuals with even one LIC policy as on 13 February, the date when the DRHP was filed, and the bid or offer opening date can apply under the policyholder reservation portion. The last date for linking your policy with your PAN was 28 February.

Those covered under group policies will not be eligible to apply under this quota.

A Demat account is mandatory to participate in IPOs. As a policyholder who wishes to apply for LIC’s IPO, one should be the first account holder in the Demat account. If it is a joint account, the applicant should be the first or primary holder.

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