LIC IPO For Policyholders
In March, the insurance behemoth Life Insurance Corporation of India (LIC) is expected to launch its first public offering (IPO). The size of the offer is not stated in the draft red herring prospectus (DRHP), but the central government will sell 31.6 crore shares, or 5% of its ownership in the company.
Aside from the massive issue size – believed to be between Rs 50,000 and Rs 90,000 crore – the IPO is also being discussed for the unique quota it has established.
LIC has opted to carve out a policyholders’ quota in its public offering, which is a first-of-its-kind. The exact number has yet to be determined, but it may be as high as 10%. “The aggregate of reservations for qualified policyholder(s) shall not exceed 10% of the offer amount,” according to the draft prospectus.
Here’s everything you need to know about LIC IPO before you think of investing in it.
I’m not sure if I’m eligible for the policyholders’ quota, so how can I find out?
Individuals who have at least one LIC policy as of February 13 (the date the DRHP was submitted) and the bid or offer opening date are eligible to apply for the policyholder reservation component. That is, if you bought your policy after February 13, you will not be eligible. You will be able to apply if you are an annuitant, which means you are a deferred or immediate pension policyholder getting a regular pension. You will not be eligible for this reservation if your late spouse was an annuitant and you had been receiving annuity after her death. Those who are insured by group plans will be ineligible to qualify for this quota
I don’t have access to a demat account. Can I apply using my parent’s or spouse’s demat account?
You must have a demat account in order to invest in the LIC IPO. You should also be the first account holder in your demat account if you want to apply for LIC’s IPO as a policyholder. If the account is a shared account, you should be the primary holder.
Is there a minimum sum assured or premium requirement to bid under the quota or for subsequent allotment?
No such requirement has been made by LIC in order to qualify for the quota. Likewise, allotment is independent to the number of policies, premium amount, or sums insured.
My mother has named me as a nominee in her life insurance policy. Is it possible for me to apply under the quota?
You will not be eligible because the quota is for policyholders, not beneficiaries. Beneficiaries who received the life insurance payout after the policyholder’s death are also ineligible to bid under the policyholder restricted part.
I used to be a long-term LIC policyholder, but I now live in another country. Is it possible for me to apply under the quota?
Only Indians who live in the United States are eligible to bid under the quota.
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