LIC IPO opens on May 4: Benefits & Restrictions for policyholders, all you need to know

New Delhi: The Initial Public Offering by the Life Insurance Corporation (LIC) is the biggest IPO to be floated in the country. Countdown for the biggest IPO has begun and so is the excitement at the Dalal Street. Those seeking to buy a share of the IPO are hoping for quick gains owing to the reputation & brand value of public behemoth. With anchor investors buying a big share of the LIC IPO, the momentum is on an uptrend.

The LIC IPO opens on May 4 and will close on May 9. Through the public, the company is aiming to raise Rs 21,000 crore. The company has made a special provision for its policyholders, something which has been done yet. Through the ‘policyholders quota’, those who have bought policies can avail discount & benefits from the issue.

Key facts for LIC policyholders:

Here are some key factors that LIC policyholders need to know before investing in the IPO.

LIC IPO: Discount for policyholders

The price band for LIC IPO has been fixed at Rs 902 – Rs 949 per share. However, for the policyholders, a special discount of Rs 60/- per shared is being offered. Therefore, when others will be paying 949 per share at the upper end, the policyholders will be shelling out just Rs 889 per share. LIC policyholders can put a maximum bid of Rs 2 lakh for the issue.

LIC IPO: What documents are a must

The policyholders will need to have certain documents in place for subscribing to the policy. In a regulatory filing, the company said that only those policyholders whose PAN is linked to the insurance policy will be eligible to apply. Those who don’t have PAN linked to policy will be treated as any other retail investor & hence wouldn’t get the prescribed Rs 60/- discount. However, 45% discount will be applicable for them as is proposed in the retail investors category.

Policyholders whose policies have lapsed

In its regulatory filing, the LIC said that those with lapsed policies can also apply for the IPO. There are many policies which remain in limbo and have not exited the LIC records due to maturity, surrender or policyholders death will be eligible under the category.

Which policyholders can’t apply under quota?

Those having LIC policies under the group insurance scheme won’t get benefit of policyholder quota. Also, the NRIs can’t apply for the IPO under the same category.

What is Rs 2 lakh limit?

The IPO has capped the maximum investment by policyholders upto Rs 2 lakh. One cannot buy public issues amounting to more than Rs 2 lakh. However, if they still wish to add more LIC shares in their portfolio, they can buy it via retail category, which is offering discount of Rs 45 per share. So, the total bidding that a policyholder could attain is Rs 4 lakh i.e. Rs 2 lakh under quota & Rs 2 lakh under retail category.