Life insurance corporation of India is all set for India’s biggest IPO ever with the Indian government diluting around 5% stake in the company to raise more than ₹60,000 to 70,000 crore. Being a part of the government disinvestment target for the current fiscal year lics IPO will see the government selling around 31.6 crore shares with the corporation being valued around ₹12,00,000 crore ₹ 15,00,000 crore. The government will continue to retain the majority stake in the LIC with other investors getting on board after the IPO will stop the IPO is likely to be opened to qualified institutional investors retail investors non institutional investors lic policyholders and the anchor investors. Under this blog you can understand the categories and being an investor you should keep in mind different things while applying for the LIC IPO.
Lic announced different sops for its policyholders in a bit to woo several investors to participate in the IPO. People who have a valid lic policy can easily apply for the IPO. The company has reserved around 10% of the IPO size for the policyholders and the staff. The staff and the policyholders are also likely to be eligible for discounted price in the application for the IPO. But there are few things that the policyholders need to keep in mind while applying for the IPO.
- You must name the primary account holders name in the application if you have a joint demat account with your spouse.
- The spouse of a deceased anuty policyholder is not allowed to apply for the IPO.
- You must have a demat account in your name if you are holding the lic policy. You cannot apply from your parents spouse or other relatives demat account.
- The policyholder reservation quota is generally not applicable for the has only resident Indians are eligible for the policy holder reservation quota.
- The group policies are not eligible for reservation or discount quota.
- The nominees of the policy cannot use the discount or reservation quota.
The retail investors are resident Indians and non resident Indians. They are non professional investors. They can reserve a portion of the IPO that gives the general public a chance to participate in the IPO process. The minimum allocation corrector investors in any IPO is around 35% as per the Sebi norms. The retail investors in India can participate in IPOs where there bids do not go more than ₹2,00,000. Retail investors can bid at the cut off price and withdraw the application money whenever they want. 35% of the lyc IPO size has been reserved for the retail investors as per the companies official statement. The Indian government is also planning to push the non professional investors to open a demat account with its allocation as it will lead to higher securities transaction tax for the government and enhance the capital in the Indian markets.
Qualified institutional investors
The qualified institutional investors include the commercial banks financial institutions and mutual fund houses besides foreign portfolio investors that are registered under Sebi. As per the Sebi mandate a maximum of 50% of the IPO size can be allocated for the qualified institutional investors and the investors cannot bid at the cut off price and also cannot withdraw the application money. As per the official statement the company has reserved at least 50% of the IPO size for the qualified institutional investors. But if there is a case of under participation from the anchor investors the remaining position must be allocated for the qualified institutional investors. It is likely to come after consultation with the Stock Exchange and book running lead managers.
Non institutional investors
Ideally the non institutional investors are individuals or entities that have a high net worth. They can invest more than ₹2,00,000 in LIC IPO. They are different from the qualified institutional investors as they don’t need to register with the Sebi to be eligible to participate in the IPO process. The investors are also not allowed to bid at the cutoff price but they can of course withdraw the application money a day before the allotment starts. Lic has year marks around 15% of the IPO size for the non institutional investors.
There ideally the qualified institutional investors who make applications to invest ₹10,00,00,000 more in the companies IPO. The Sebi allows IPO bound companies to reserve at least 60% of the IPO size for the anchor investors. They can only Cabot such investors cannot include the merchant bankers or the companies promoter or the immediate relatives from the company. The 3 conditions are mentioned for anchor investors looking forward to apply for LIC IPO as per the companies official statement.
- There can be maximum of 2 anchor investors who can come together if the anchor investor portion is around ₹10,00,00,000.
- A minimum of 2 anchor investors and a maximum of 15 anchor investors can come together if there is an anchor investor protection between ₹10,00,00,000 and ₹250 crore. The minimum allotment for each anchor investor will be around ₹5,00,00,000.
- 5 anchor investors are minimum and maximum of 15 anchor investors can come together when the anchor investment portion is around more than ₹250 crore. For every additional ₹250 crore an additional 10 anchor investors can come together or apart their off will be permitted. The subject to a minimum allotment of ₹5,00,00,000 for anchor investors.