With an asset base of over Rs 34 lakh crore – that is more than the GDP of many countries – the Life Insurance Corporation (LIC) of India is all set for the upcoming mega IPO (Initial Public Offering), as the government is going to sell 5 per cent of its stake in the life insurance behemoth.
According to the Draft Red Herring Prospectus (DRHP) filed by the LIC of India on February 13, 2022, a total of 316,249,885 equity shares having a face value of Rs 10 per share are offered in the IPO.
Out of the approximate 31.62 crore shares offered for sale in the IPO, 10 per cent of the shares will be reserved for the insurance policyholders of the LIC of India and 5 per cent for the employees of the insurer.
So, crores of policyholders (according to DRHP, the LIC of India had 28.6 crore in force policies under Individual Business (within India) as at March 31, 2021,) will get a chance to apply for the 3.16 crore shares reserved for them.
Not only the policyholders and the employees of the insurance giant will have reserved quotas, but are also expected to get a 10 per cent discount on the issue price, which, according to Bloomberg, is expected to be priced around Rs 2,000 – Rs 2,100 apiece.
Who can apply
To apply under the policyholders’ quota, an insurance policyholder of LIC of India should meet the following eligibility conditions:
Should have a policy allotted in his/her name on or before February 13, 2022.
Should have PAN linked with the policy, which may be done latest by February 28, 2022.
Should have a demat account in his/her name. For joint demat account holders, the first holder will be eligible. Through a demat account, a policyholder may apply to invest Rs 2 lakh under the policyholders’ quota and another Rs 2 lakh in the general pool for retail investors – i.e. maximum Rs 4 lakh.
Who can’t apply
Nominees, persons getting annuity after the death of policyholders and NRI (Non-Resident Indian) policyholders are not eligible to apply under the quota for LIC policyholders.
In case of joint life policies, while both the policyholders are eligible, but in case if such a policyholder doesn’t have a demat account or is not the first holder of a joint demat account, he/she can’t apply.
The policyholders, whose policies are allotted after February 13, 2022 are not eligible for application under the policyholders’ quota.
The policyholders, who don’t have their PAN linked with their respective policies are also not eligible to apply under the quota.