A COMPREHENSIVE GUIDE TO THE LIC IPO

A COMPREHENSIVE GUIDE TO THE LIC IPO

INTRODUCTION

The Life Insurance Corporation of India will host a board of directors meeting to evaluate and authorize the distribution of dividends, if any, according to a BSE filing. The conference is set to take place on May 30.

After a successful initial public offering (IPO) that raised Rs 20,557 crore for the exchequer, the country’s largest insurer made a lackluster debut on stock exchanges, listing at a discount of over 8%.

“The Life Insurance Corporation of India has informed BSE that a meeting of the Corporation’s Board of Directors is scheduled to be held on May 30, 2022, to consider, among other things, the following agenda items: In a BSE filing, LIC stated, “To evaluate and approve the audited Annual Financial Results (standalone and consolidated) for the quarter/year ending March 31, 2022, and payment of Dividend, if any.”

ABOUT LIC IPO

READ MORE:

India Is Experiencing A Power Crisis As Coal Reserves Hit Critical Limits

What Exactly Is The NASDAQ? Discovering The Global Stock Exchange

HOW INDIA IS TRAPPING CHINA WITH ITS MILITARY STRATEGY

HERE’S EVERYTHING YOU NEED TO KNOW ABOUT LIC IPO

1. The LIC IPO is India’s most extensive public offering, with Rs 21,000 crore.
2. Employees will receive around 15.81 lakh shares, while policyholders will receive approximately 2.21 crore shares.
3. LIC IPO applicants can apply in lots of 15 containing 15 LIC shares. An applicant can apply as little as one lot or as many as fourteen.
4. As a result, a minimum of $14,235 is required to apply for the LIC IPO.
5. Policyholders will receive a 60 percent discount, while LIC employees applying for the public issue would receive a 45 percent discount.
6. LIC policyholders will have a 10% reservation component of the offered size, while workers will have a 5% reservation portion of the post-offer equity share capital.
7. The IPO was planned to go live on March 31, but it was postponed due to poor market conditions created by the crisis between Russia and Ukraine.
8. Three persons with firsthand knowledge of the development said the LIC IPO had received investment pledges of Rs 13,000 crore from anchor investors, more than twice the amount of shares offered to such investors.
9. On May 17, the LIC shares are expected to be launched on the BSE and NSE.
10. Instead of the five percent mentioned in the previous Draft Red Herring Prospectus, the government, which owns the insurance giant, proposes to sell a 3.5 percent interest (DRHP). The mammoth IPO is expected to contribute significantly to the government’s disinvestment proceeds this fiscal year. The government estimated receipts at $65,000 crore, up from $13,531 crore in the previous fiscal year.

LIC IPO FOR POLICYHOLDERS — WHO CAN BUY?

The LIC has identified specific criteria in its Draft Red Herring Prospectus (DHRP). First, policyholders will be allowed to use their quota to purchase shares in the LIC IPO at a discount of Rs 60. However, all policyholders must first open a Demat account to apply for the IPO. Second, according to the company’s regulatory filing, LIC policyholders whose PAN is linked to the insurance policy as of February 28, 2022, will be able to apply for the LIC IPO under the policyholder quota.

Apart from that, all policies that have not left LIC records due to maturity, surrender, or the policyholder’s death are eligible for reserve under the Policyholder Reservation Program.

WHY ARE EXPERIENCED INVESTORS NOT IN A HURRY TO PUT THEIR MONEY?

The Life Insurance Corporation of India policyholders hurried to invest on the first day of the life insurance behemoth’s Initial Public Offering (IPO), causing their quota to be oversubscribed.

Even after extending primary market hours from 10 a.m. to 7 p.m. on all days until the issue closes, it took three days to get the retail investors’ quota oversubscribed.

While a discount of Rs 60 per equity share for policyholders and Rs 45 per equity share for LIC of India workers and retail investors would have enticed these investors, the absence of interest from bulk investors is concerning.

The bulk of LIC policyholders is hard-line conservatives, especially those who purchase endowment insurance, which is the LIC of India’s mainstay. Similarly, the vast majority of the Corporation’s workers would never have invested in market-linked products and only opened Demat accounts to invest in the LIC IPO.

As a result, it’s primarily novice investors who have raced to engage in the IPO, while seasoned retail investors have a cautious attitude, even after receiving a discount. In addition, many institutional investors are still on the fence about whether or not to join.

SO, WHAT MAKES THE EXPERIENCED INVESTORS GO SLOW IN INVESTING IN THE LIC IPO?

Russia-Ukraine War

There are rumours that Russia may declare a full-fledged war on Ukraine to commemorate Victory Day, which is observed in Russia every year on May 9.

Suppose it happens on the last day of the LIC IPO (on May 9, 2022). Then, there is a reasonable risk of a market crash and subsequent listing of the LIC of India on secondary markets at a much lower price than the discounts granted to policyholders, staff, and retail investors.

As a result, seasoned investors such as Majumder believe it is best to sit on the side-lines and wait for a better time to invest through secondary markets.

CONCLUSION

The initial public offering (IPO) of LIC is expected to be a significant event in the country’s financial calendar this year. Those interested in investing in LIC shares should keep an eye on the other updates released in the days running up to the IPO. In addition, customers of LIC should amend their policies, PANs, and KYC and open an HDFC DigiDemat account.

With good cause, the LIC IPO has piqued the interest of both investors and LIC customers. We hope that now that you have this information, you will be well prepared to apply for the LIC IPO when the time comes.