LIC IPO: If you have LIC policy then you will get shares cheaply, know the important things related to it here

The IPO of Life Insurance Corporation of India (LIC) will open on May 4. This will be the biggest IPO in the country. The government is going to sell 3.5% stake in LIC through IPO. There is a plan to raise Rs 21,000 crore from this. If you have LIC policy then you will get a discount of Rs 60 per share. In such a situation, if you have an LIC policy, then we are telling you how and how much benefit you will get by investing money in IPO. Apart from this, we will also answer many of your questions related to IPO.

Whether policyholders have been given separate benefits?

Yes. According to DRHP, 10% (2.21 crore shares) of shares will be reserved for LIC policy holders under the reservation portion. According to media reports, policyholders will get a discount of Rs 60 in the IPO.

Is there any lock-in period for the policyholders’ share of reserves?

No, there is never any lock-in period for retail investors. Policyholders can sell the shares immediately after listing.

What is the minimum amount to be invested in this and how much will the policyholders benefit?

• The price band of LIC IPO is between Rs.902 to Rs.949 and the lot size is 15 shares.
• If you apply for IPO from policy holder quota then (949-60=889×15=Rs 13,335), at least Rs 13,335 will have to be invested.
• Whereas a common investor will have to invest Rs 14,235 according to the upper price band.
• In this way, the policy holder will get a total discount of Rs 900 on the application of one lot IPO.
• On the other hand, if you apply from the policy holder quota according to the lower price band in the IPO (902-60=842×15=Rs 12,630), at least Rs 12,635 will have to be invested.
• Whereas the common investor will have to invest Rs 13,530 according to the upper price band.

What are the benefits of getting a discount?

You apply against the policy holder quota and you get 1 lot as per the upper price band. In such a situation, even if the share is listed in the stock market for Rs 949, you will still get a profit of Rs 60 per share. Otherwise, if it is listed above 949, then that benefit will be different. Apart from this, even if this share is listed at a price as low as Rs 60, you will not have to suffer any loss.

Do policyholders need to have a demat account to buy shares?

Yes. As per SEBI rules, equity shares of any company are issued only in demat form. Hence anyone, be it policy holders or retail investors, needs to have a demat account.

Can a policy holder apply from the demat account of his/her spouse or son or any relative?

No, Policyholders should have a Demat account in his/her name.

How to open Demat account?

You can open it with two depositories. NSDL and CDSL. We call this demat account. After this you have to open a trading account with any brokerage house. However, if you open a trading account with a brokerage house, that broker will do the demat work. To open a demat account, you will need to submit documents like PAN, a bank account, your identity card and address proof.

I have a joint life policy. Will both me and my wife be eligible for reservation or not?

Policyholders can apply for only one of the two equity shares under the reservation portion. The PAN number of the applicant (you or your spouse) bidding for the offer should be updated in the policy record. The applicant should have a demat account in his own name. If the demat account is a joint one, the applicant should be the primary holder of the demat account.

I have a lapse policy of LIC. Can I buy shares under Policyholders Reservation?

All policies that have not been taken out of LIC’s record by maturity, surrender or death of the policyholders are eligible under the policyholders’ reservation portion.

Biggest LIC IPO

LIC’s issue will be the biggest IPO ever in the Indian stock market. Government can raise Rs 21,000 crore by selling 3.5% stake in LIC. After listing, the market valuation of LIC will give competition to top companies. Prior to this, the issue of Paytm was the biggest and the company had raised Rs 18,300 crore from IPO last year.