LIC IPO

We can approximately summarize the size of the LIC of India IPO, although we must await the final confirmation by the government on actual numbe₹ Here is what to know.

• The total paid up capital of LIC comprises of 632,49,97,701 shares (approx. 632.50 crore shares), which is the issued and paid up capital
• As part of the current IPO slated to open in March 2022, LIC plans to offer a total of 31,62,49,885 shares (approximately 31.63 crore shares) to the public
• The entire offer will be by way of offer for sale, with no fresh issue component and the government will dilute 5% of its stake in LIC through the IPO.
• Post the IPO, the stake of the government of India in LIC will come down from 100% to 95% while the public shareholder in LIC will go up to 5%
• Initial reports suggest a possible price band of ₹ 2,000 to ₹ 2,200 as the most likely price for the LIC IPO.
• If you consider an average price of ₹ 2,100, issue size will be ₹ 66,412 crore; just about sufficient to fill the government disinvestment gap of ₹ 65,000 crore for FY22.

A number of brokers are offering the facility to pre-apply for the LIC IPO. This is part of the LIC IPO process. There are 2 types of pre-application being offered now.

• Some brokers are inviting their registered online broking clients to register for the IPO as a pre-applicant so that the alert will be sent to them by email and SMS. Based on this alert, the customers can log-in and apply for the IPO of LIC.
• However, some brokers in the LIC IPO are offering genuine pre-application. Here is how it would work. They are permitting registered customers to visit the IPO page and pre-apply for the IPO mentioning the number of shares they would like to apply for. Here you can also choose whether you want to pre-apply as individual, employee or as policyholder. You can place the bid and confirm pre-apply. A UPI notification will be sent to block the funds on the said date and the pre-application is done.

When the government announced the LIC IPO on 13th February and filed its draft red herring prospectus (DRHP), one of the key requirements for LIC policyholders was to complete the linking of their PAN card with their LIC policy numbers to be eligible for the Policyholder quota in the LIC IPO

LIC Policyholders of active policies have been allocated a special 10% quota by the government. So out of the total issue size of 31.63 crore shares in the LIC IPO, 3.16 crore shares will be reserved for the LIC policyholde₹ In addition, policyholders will also get a discount of 10% on the stated price band. However, to get these benefits, then must ensure that their PAN cards are linked to the LIC policy on the LIC website. This linking is essential for all those who apply under the LIC policyholder quota. Here is how to do the linking.

• The first step is to go to LIC's official website www.licindia.in
• On the LIC Home Page, policyholders can click the "Online PAN Registration" option
• Once you arrive on the target page, click on the "Proceed" button
• Next page asks for your email address, PAN card details, mobile number and LIC policy number, which you need to properly input in this page
• Enter the correct Captcha code and click on the "Get OTP" option
• Enter the OTP in the space provided in the portal and click on the "Submit" option.

With this, you seen an online acknowledgement of linking completed and you can download that acknowledgement. The PAN policy linking is complete and you are now eligible to apply under the policyholder quota.

For two reasons, policyholders will be at an advantage in using the policyholder quota. Firstly, 10% of the total issue size or approximately 3.16 crore shares are reserved for LIC policyholders and only they can apply in this quota. The quota is open to all policyholders irrespective of size of policies. Secondly, the policyholder quota also entails a discount of 10%, which will substantially reduce the cost of acquisition of shares.

The final dates of opening and closing of the LIC IPO are yet to be announced. However, according to reports coming in, the LIC IPO could either open on 10th March or 11th March. It really cannot delay much beyond that as the government is intent to list LIC in this fiscal year and also show the proceeds of the IPO in the current year itself. Normally, IPOs are kept open for 3 working days.

These details are yet to be announced. However, assuming that the pricing of the IPO could be in the range of around ₹ 2,000, the lot size would be 6 or 7 shares per lot. For retail investors, the maximum application size would be around 14-15 lots. However, these are just approximations and we have to await the final dates announcement.

Normally, the basis of allotment is completed within a period of 3-4 working days from the closure of the IPO. Once that is done, then the refund orders are processed on the next working day and within a couple of days the demat credits are completed while the day after that would be the listing day.

The government of India has already appointed KFINTECH as the registrars to the LIC IPO. Incidentally, KFINTECH was formerly known as Karvy Computershare Ltd and is based out of Hyderabad and is one of the largest equity registrars in India.

LIC IPO is slated to list on the National Stock Exchange (NSE) and also on the Bombay Stock Exchange (BSE). The dates of listing are yet to be announced.

The online trading interface of the online trading platform normally provides a link for “Check order placed”. You can click on this link to check if the order for the LIC IPO has been actually placed or not.

Note that such orders can be modified or cancelled till the closure of the placement of bids announced by the broker.

One the allotment process is completed, you can check the allotment status of the LIC IPO, either on the BSE website or on the website of the registrar of the IPO, KFINTECH. That is only possible after the basis of allotment is finalized, around 3-4 days after the issue closure.

These are to be announced and will be put out along with the announcement of the IPO date and the IPO bidding range.