LIC IPO: The Life Insurance Corporation of India – more popularly identified as LIC – is one of the most popular names associated with all types of insurance in India. LIC is one of the oldest companies in India, which has been operating since the year 1876 and presently runs as a collection of 245 insurance firms. They have a total of 290 million policyholders across various lines of insurance. In the financial year of 2018-19, LIC was recorded to successfully settle 26 million claims among their customers. Recently, the LIC announced the introduction of an Initial Public Offering (IPO), which is set to start in May 2022. The IPOs are supposed to become the largest public offerings in India. According to the LIC IPO, the Government will be selling five percent of the company as a major offering. An industry count mentions that LIC controls approximately 72% of the market and 66% of the total premium collection.
For those who are new to the finance world, the Government of India has a share in the Life Insurance Company of India. In the process of LIC IPO, the government will sell five percent of the total shares and raise money from the same. This share will be offered in public to the ones who are willing to buy them. There will be quotations set for retail investors, which will account for thirty-five percent of the total proceeds from the IPO.
In this article, we will explain and explore the different areas related to the LIC IPO and what one should expect from this new scheme.
Prices to Look For in IPO
Since the announcement of the LIC IPO, the prices of all shares have been fluctuating. The current price is 25 per share. The share price of LIC for ordinary investors at present will be increased by 2.5 times when the LIC IPO will be offered. For all LIC policyholders, the quotations will be different from the external investors. They will have an easier chance of investing with discounts as well as reservations on the shares offered.
Investors of the IPO can bid for shares in a 15-shares lot. There will be an employee reservation (15.81 lakh) and for policyholders (2.21 crore). A discount of Rs 45 is being offered to retail investors and policyholders of LIC can avail of a discount of Rs 60. Half the shares will be reserved for qualified institutional buyers (QIB) and 15 per cent of shares will be reserved for non-institutional investors. The other part of the shares will be allotted to retail investors.
How to Apply for LIC IPO?
The exact line of application for various investors in the LIC IPO arrangement is not very clear with the announcement. But there has been a line of investment and stock purchase rules mentioned by the LIC. The first offering of the IPO is set to be listed on all major stock markets. The important ones to note are the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
All prospective inspectors should have a DEMAT account, especially if they are purchasing the LIC IPO online. For investors who are willing to purchase the stocks online, they can visit sites like Angelone, Zerodha and Groww among other investment sites. These sites are putting out application details for the LIC IPO, where investors can register. The payments can be made through different forms of online payment, including UPI.
What to Expect from LIC IPO?
The LIC IPO was announced recently on April 27, 2022. The launch and tenure of this public offering will be open from May 4 to May 9. Since LIC is a state-owned insurer, the Government of India will be directly involved in the process. The government will put shares up worth a price band of Rs 902-949. There will be an offload of 3.5%, which will amount to a total of 22.13 crore shares, around Rs 20,557.23 crore.
According to the government, they expect to raise a total that is reduced by the initial projection by Rs 60,000 crore. Despite this, the LIC IPO is the largest initial public offering in India, since it is being conducted with the largest investment company in the country. The allotted shares will be issued to their bidders on May 12. Unsuccessful bidders will receive their refunds on the same date. All shares will be credited to the DMAT account of the bidders by May 16. Stock trading can start in the secondary market the next day. Market analysts are all on the lookout for the trading of these LIC IPO trading to begin on May 4, 2022. There might be an issue cut of 21 thousand crores. This amount is a substantial increase compared to the average and usual numbers of an Indian IPO.
LIC IPO Final Observations
In the coming month of the financial year, there is a record DEMAT and trading expected in the coming month. Most brokers are looking forward to a huge number of users who will be interested in trading in the LIC IPO. There are new accounts that are opening up in line with the IPO guidelines, that indicate an expectation of trading and purchasing of shares. Some analysts are also noting this as a weakness in the short term. While an IPO is all set for long-term investors to make money. But in the short term, with so many newcomers to the market, it might pave some way for short-term losses.
There are a lot of eyes set on the stock purchase and trading market in the next month. With the involvement of two major players in the financial world – the Indian government and the largest investment firm – there are a lot of expectations. Investors have their attention set on the LIC IPO in their recent investment ventures for the fiscal year of 2022-23.