What LIC IPO Sets Aside For Retail Investors, Employees, Policyholders

Despite reducing the stake sale to 3.5% from the originally planned 5%, Life Insurance Corp.'s initial public offering's sheer size means that the allocation for policyholders, employees, non-institutional and retail investors categories will be much bigger than any other Indian maiden offer.

India's largest life insurer has reserved 55% of the total issue size of 22.14 crore for policyholders, employees, non-institutional and retail investors, according to its red herring prospectus.

The government is looking to raise over Rs 21,000 crore from a 3.5% stake sale in LIC. The initial public offering will be priced between Rs 902-949 apiece and will be available in lots or multiples of 15 shares.

The insurer has reserved 0.7% and 10% for employees and policyholders, respectively. Net of these two categories, 31% is set aside for retail investors.

The total value of the shares available per application for each of these categories is capped at Rs 2 lakh.

Policyholders

LIC has a special reservation of 2.21 crore shares for its 26-crore policyholders. They will be offered shares at a discount of Rs 60 apiece.

But only those who have linked their PAN with their policies before Feb. 28, 2022 and have demat accounts are eligible to invest. In response to BloombergQuint's query at the press conference held on Wednesday, LIC Chairman MR Kumar said around two crore policyholders have registered their PAN with the insurer.

A policyholder can apply for shares worth up to Rs 4 lakh—Rs 2 lakh each under policyholder and retail categories. Both the applications, even if from the same demat account, will be valid.

There will be no lock-in period for policyholders and they can sell on listing.

Eligible Policyholders

• Must have a valid demat account in their own name.

• The applicant whose PAN number was updated in the policy records by Feb. 28.

• In case of a joint life policy, two policyholders can apply; they should be primary holders of the demat account through which the application is filed.

• The policyholder must reside in India at the time of the bid/offer period.

• The policy should have been issued on or before the date of the draft prospectus.

• All policies that have not matured or have not been surrendered or have not exited records on the death of the policyholder are eligible.

• The proposer of the policy for a minor child.

• A 'karta' or head of the Hindu Undivided Family holding the HUF policy.

Not Eligible

• Group policies.

• The spouse of a deceased policyholder receiving annuity.

• Nominees

Employees

Employees of LIC have a separate quota of 0.16 crore shares, and they are also allowed to apply in the retail category, subject to meeting other conditions. Meaning, they can apply for shares of up to Rs 4 lakh.

Employees and retail bidders will get a discount of Rs 45 per share.

And an employee who is also a policyholder can apply in retail and policyholder categories as well—or for shares worth Rs 6 lakh. All three applications will be considered valid.

If the employee and a policyholder skips the retail category and instead chooses to bid under the non-institutional portion exceeding the Rs 2-lakh limit, all three applications will still be considered valid.

However, an eligible employee and policyholder can't apply under both retail and non-institutional categories. In such cases, applications made under both retail and non-institutional categories would be considered as multiple bids, and rejected.