LIC IPO opens for retail investors: 8 things to know before subscribing

New Delhi: The Life Insurance Corporation of India (LIC) has opened its Initial Public Offering (IPO) for retail investors, with special discount for existing policyholders.

The IPO is by far the biggest public issue in the country, aiming to raise Rs 21,000 crore with divestment of 3.5% stake. The IPO opened for anchor investors on May 2 and received huge response. In the retail market also, the public issue is getting good response and was subscribed over 35% till last reports came in.

Various brokerages have come up with their suggestions and recommendations on buying a stake in nation’s biggest IPO. Most of them maintain a buy call on the public issue.

Here are some pointers which you should keep watch before subscribing to it:

1) The IPO by LIC is by far India’s largest public issue and once in a lifetime opportunity for first-timers to subscribe to public issue

2) The LIC IPO price band has been fixed at Rs 902 – Rs 949 per equity share. However, the policyholders and employees of LIC will be able to avail special discount of Rs 60 & Rs 45 respectively.

3) A whopping amount of 2.21 crore shares have been earmarked for policyholders while 15.81 lakh shares reserved for LIC employees.

4) Applicants will be able to buy the IPO in lots comprising of 15 shares. And, the minimum amount that an investor would have to shell would be Rs 14,235 ( i.e. ₹949 x 15). An applicant can post application for minimum 1 and maximum 14 lots or 210 shares.

5) The maximum bid for policyholders, employees and retail investors have been capped at Rs 2 lakh. However, policyholders if want can buy additional shares worth Rs 2 lakh by acting as retail investors & without availing any discount.

6) The share allotment will be announced on May 12 while the LIC shares will be listed on the stock exchanges by May 17.

7) Anchor investors have committed Rs 13,000 crore investment in the IPO, which is about twice the value of shares offered to them.

8) The government is divesting 3.5% stake in the firm, as against to earlier 5% stake as mentioned in the Draft Red Herring Prospectus (DRHP). The change in divestment plan was effected because of sluggish markets due to Russia-Ukraine conflict. However, the IPO proceeds will be a significant contributor to government divestment targets this fiscal.