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Home / Markets / Ipo /  A quick guide to LIC IPO

The much-anticipated Life Insurance Corporation of India’s (LIC) IPO, India’s largest public issue, opened on 4 May. The government is offloading a 3.5% stake in the life insurance behemoth. At the upper end of the price band, the offer size comes to 21,000 crore. As of 5 May, the IPO had been subscribed 1x time already, shows NSE data. 

The IPO price band has been fixed at 902–949 per share. The offer closes on 9 May and investors can bid on 7 May, a Saturday, too. The bid lot size is 15 equity shares and in multiples thereof.

 Pricing and discount

The offer is being made through the book-building process. Aditya Kondawar, an independent IPO expert, explains how the final allotment price is determined in this case. “Once the subscription period is over, the demand and supply are taken into account and the price at which maximum demand has come becomes the cut-off price." 

He suggests, that investors place bids at the highest price (after accounting for the discount) to maximize their chance of getting an allotment.

Retail investors and eligible LIC employees are being offered a discount of 45 per share for bidding in their respective reserved portions. Eligible LIC policyholders will get a discount of 60 per share for bidding in the portion reserved for them. If you fall under any of these categories, you can apply for shares in multiples of 15, such that the bid amount does not exceed 2 lakh (net of discount).

 Basis of allotment

As per the LIC red herring prospectus, employees, policyholders and non-institutional bidders (bids of 2 lakh and above, includes HNIs) will be allotted shares on a proportionate basis. Except for in case of under subscription, the value of shares allocated to an employee or a policyholder will not exceed 2 lakh. 

Retail investors will be allotted not less than 15 shares each, subject to availability. The remaining shares, if any, in the retail portion will be allotted proportionately. 

Multiple categories

While most people may be able to apply for the LIC IPO only under one of the categories, if you happen to be connected with LIC—as an employee or policyholder or both—you can be an applicant under three separate categories, if you want. That is, you can place a bid under the portions reserved for employees, policyholders and retail or non-institutional investors (one of the two).  Note that, if you make an application both under the retail and non-institutional portion, they will be considered as multiple bids and both will get rejected.

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