• HDFC securities
• 02 May 2022
• LIC-IPO

It rained IPOs in 2021, with 63 companies raising Rs. 1.19 trillion, a record for any year. This expansion is expected to further go on until 2022. Only in the first quarter of 2022, 23 companies are planning to go public! One IPO (Initial Public Offering), however, has everyone on the edge of their seats: LIC (Life Insurance Corporation of India). The IPO of India's most well-known insurance company is expected to be the country's largest-ever IPO.

In February of this year, LIC filed a Draft Red Herring Prospectus (DRHP) and later tweaked the IPO's size. The insurer reduced the size of its initial public offering (IPO) from 5% to 3.5%, raising about Rs. 21,000 crores. In spite of the reduction in size, this is still considered the largest IPO in the Indian stock market. In the IPO, the government will offer 221,374,920 equity shares as an offer for sale. The LIC has set a price range of Rs. 902 per share on the low end and Rs. 949 per share on the upper end. This price range is also known as Price Band in the stock market jargon. Bids for a minimum of 15 equity shares and multiples of 15 can be made on the electronic platform set up for the purpose. It has reserved 10% of the total shares offered for the policy holders of LIC and 5% for the LIC employees. Also, policy holders get a discount of Rs.60, while the retail investors and eligible LIC employees get a discount of Rs.45 on the share price of LIC.

So how can a LIC policyholder take advantage of this opportunity? Applying for the LIC IPO as a policyholder is simple. You only need to make sure you have these two things ticked off the list of requirements-

1. An active Demat account-

• If you don’t have a Demat account yet, visit either NSDL or CDSL websites for a list of registered depository participants.
• Then, provide your recent photograph, PAN card, address proof and a cancelled cheque to complete the KYC for opening your Demat account

2. A PAN card linked to the policy account-

• To update your records linked to the policy account, visit www.licindia.in and click on the icon to register your PAN online.
• Enter your email ID, date of birth, contact number, full name and LIC policy number
• Click to check the declaration box and enter the displayed captcha code
• Click on ‘Get OTP’ and enter the OTP you received to complete the verification process.

Before moving ahead with the application process for LIC IPO as policyholders, you will need to check for the applicability following rules as per the different policy holding scenarios-

1. Even if you have multiple policies, you can only apply for the IPO once.
2. If you propose a policy for a minor child, you are eligible for reservations specifically set aside for the policyholder reservation portion because you are the owner of the policy.
3. Only one of the policyholders can apply under the policy reservation category if the policy is held jointly. The other person/(s) can apply using the standard procedure for non-policyholders.

After you are done with the essential requirements regarding eligibility, you can apply for the LIC IPO following a simple procedure-

1. On the DP's platform, go to your profile. While the navigation process varies from company to company, you should check out the IPO section of the platform you're using.
2. After that, look for the appropriate category under the LIC IPO tab. The 'Policyholder Reservation Portion' is open to all eligible policyholders.
3. Fill in your information, place a bid for the number of shares you are applying for and then click the submit button.
4. Following that, the participating bank will issue you a mandate you will need to accept.
5. When you're finished, click the 'apply now' button. Then, using UPI or any other online payment option, complete the payment option.
6. If you choose the UPI payment option, you will receive a request to block the required funds on your UPI mobile application.
7. Once approved, the funds will now be held in your bank account until the allotment process is completed. For such UPI-based bids, a limit of Rs 2 lakh has been set.
8. The money will be automatically debited from the account if the shares are allotted to you. If you do not get the shares in the share allotment process, the funds blocked for IPO bidding will be released and you can utilise those funds for any other purpose you wish.

Retail investors who don’t fall under the category of policyholders can apply under the QIB (qualified institutional buyers) segment. The procedure for the same includes the following steps-

1. Go to your online net-banking account and log in. After that, you'll be taken to their home page.
2. Go to the investment section and select IPO/e-IPO from the drop-down menu.
3. Fill in the depository and bank account information. The verification process will be finished once you've done that.
4. After you've completed the verification process, select the 'Invest in IPO' option.
5. Add the number of shares and the 'bid price' to the LIC IPO. Then press the 'Apply now' button.
6. The money for the application will be held in the bank until the allotment is finalised. Following the allotment of the shares, the account will be debited for the applicable amount. If you don’t get the shares in the allotment process, the money blocked shall be discharged.

Being an investor in a company that holds 61.6% of the market share in terms of premium and which is the fifth largest in terms of net premium earned, globally, is like adding a premium feather to the cap of your investment portfolio. With the listing being just around the corner, it has generated a great interest amongst the investors. Despite the buzz, before you take the plunge in IPO investing, remember to do the checks to see if this is beneficial to you, or are you ready to take the associated risks which invariably comes with equity investing.