After a long wait, India’s largest insurer Life Insurance Corporation of India (LIC) is finally going to hit the market with an initial public offering (IPO) next month. As per reports, the government has set a price band of Rs 902 to Rs 949 per equity share for the IPO. The offer will open on May 4 and subscriptions can be made till May 9. The government, LIC’s parent, has announced a discount for policyholders under the Policyholder Reservation Portion.

Share Market Live

NSE

Following are some frequently asked questions (FAQs) by the LIC policyholders about the public offer.

I’m a LIC policyholder. What’s in the IPO for me?

According to the Draft Red Herring Prospectus submitted by the LIC to market regulator SEBI, up to 10 percent of the total shares will be reserved for policyholders. The government is expected to sell 221.3 million shares, or a 3.5 percent stake, in the insurance behemoth through the offering.

Are there any benefits for me?

Policyholders may get a discount of Rs 60 on subscribing to the shares of India’s largest insurer. “Policyholders have played an important role in LIC’s journey and growth. The unanimous view, within the government, was to offer them a higher discount as a reward, for availing the issue,” Business Standard quoted a senior government official as saying.

ALSO READ: These LIC policyholders can avail Rs 60

discount on shares in IPO

Can I subscribe?

LIC policyholders who are residing in India can subscribe to the shares in the IPO. NRIs are not eligible to apply for the IPO via the Policyholder Reservation Portion. Even those policyholders who hold a joint account can participate in the upcoming IPO, although only one person will be allowed to apply for shares. In case of a lapsed LIC policy, the policyholder can apply for shares under policyholder category and claim 10 percent quota benefit. Those having group policies do not qualify for bidding in the LIC IPO under Policyholder Reservation Portion.

ALSO READ: View: What I don't like about the LIC IPO

How much can I subscribe?

An eligible policyholder can bid for a maximum amount of Rs 2 lakh. Under the RIB or Non-Institutional Bidders categories, eligible policyholders can apply for shares of an additional amount of Rs 2 lakh (net of policyholder discount) and more than Rs 2 lakh (net of policyholder discount), respectively.

Is there a minimum number of shares that I have to subscribe to?

Policyholders will have to apply for a minimum number of equity shares (x) in the IPO as stated in the offer documents.

Will LIC give preference to those will higher premium amount or policies?

According to the LIC draft papers, all eligible policyholders will be treated equally for the IPO, regardless of the premium amount, sum assured, or number of policies they hold. Equity shares in the insurance behemoth will be allocated through a competitive bidding process.

ALSO READ: LIC IPO: State insurer valued at Rs 6.07 lakh crore,

to raise Rs 21,000 crore via public offer

Where will the shares be allocated?

Equity shares are issued in dematerialised form only and not in physical form. Hence, all policyholders interested in participating in the IPO must have a demat account.