The highly-awaited initial public offering of the Life Insurance Corporation of India is finally about to hit the bourses in May 2022. LIC is not just an insurance company but also an investment firm. Till as recent as 2001, the market share of LIC was 100% i.e. it had an absolute monopoloy with no competition. With the advent of private players, this market share took a dip. However, being a Govt undertaking, LIC enjoys customers’ trust due to the sovreign guarantee.
- The Finance Minster had first announced the disinvestment in LIC through the IPO way back in Union Budget of the year 2020.
- The price band and date of bidding has been recently announced after a lot of delay.
- With this offering, the Govt is planning to issue 3.5% stake of the company.
What is an Initial Public Offering?
- Whenever a company wishes to raise capital by offering ownership i.e. shares to the general public, it has to come up with an Initial Public Offering. For that it has to come up with a red herring prospectus as per the Company’s Act.
- Thereafter it files the relevant papers with the Securities & Exchange of India (SEBI). After getting a node from the SEBI, a time frame is fixed for bidding.
- If the offering gets undersubscribed, all the bidders get the applied lot. If it over-subscribes, the allotment takes place through a computerized process.
- After allotment the listing of shares finally take place and they trade on the recognised stock exchanges i.e. NSE & BSE.
LIC IPO Application Details
Here are the features and the application details of the proposed IPO:
- Issue launch date: 4th May 2022
- Issue closure date: 9th May 2022
- Price band: Rs. 902/- to 949/-
- Single lot size: 15 shares
- IPO allocation date: 12th May 2022
- Listing date: 17th May 2022
- Issue size: Rs. 21,000 crores
How to Apply for LIC IPO?
- Interested investors firstly need to have a dematerialised account, also known as D-MAT account at a broker of their choice and preference.
- Investors then need to place their bids within the given time duration for the desired lot size.
- An amount corresponding to the desired lot size is thereafter required to be blocked from the bank account.
- If no lot gets alloted, the blocked amount is unblocked again.
Interesting Facts About LIC
- LIC has an incredible market share of 61 to 64% in India’s insurance sector.
- LIC is not just an insurance company but also an investment firm. It owns stocks worth whopping 9.5 lakh crores.
- In India, 3 in every 4 life insurance policies are sold by LIC.
- LIC’s Assets are nearly 2 times the entire GDP of Pakistan.
- The asset base of the company is also more than India’s entire mutual fund industry.
LIC IPO – Related Abbreviations & Terminologies
- LIC: Life Insurance Corporation of India
- IPO: Initial Public Offering
- SEBI: Securities & Exchange Board of India
- Shares: Shares represent ownership in a particular Company.
- Broker: A platform through which one trades and invests in securities for example, Zerodha, Upstox, Groww, etc.
- Stock Exchange: An electronic system through which people involve in trading (buying/selling) financial securities like Stocks, Exchange Traded Funds, Bonds, Real Estate Investment Trusts, etc.
- NSE: National Stock Exchange
- BSE: Bombay Stock Exchange
Hopefully, this article on the upcoming LIC IPO was helpful for all curious readers. The investors are however advised that the IPO & other such investments related to the securities market are subject to market risk. The candidates must make themselves aware of all the related documents carefully.
LIC IPO – FAQs
Whenever a company wishes to raise capital by offering ownership i.e. shares to the general public, it has to come up with an Initial Public Offering.
The bidding can be done between 4th to 9th May 2022.
The LIC shares will be listed on 17th May 2022.
A single lot of LIC IPO consists of 15 shares.
The price band is Rs. 902 to 949/-