How to Apply for LIC IPO as a LIC Employee?

Introduction

LIC is the largest insurer in India with a market share of approximately 66% with the closest competitor having a market share of approximately 7.5%. It is also one of the earliest companies in the country and still has been a preferred choice for investors despite having many private insurers in the market. This makes the LIC IPO a lucrative investment opportunity for investors. The LIC IPO is open for retail investors as well as institutional investors. Among the retail investors, the existing policyholders and employees can also subscribe to the LIC IPO based on certain terms and conditions mentioned in the DRHP.

Given below are the details needed for the employees to subscribe to the LIC IPO. 

What is the LIC IPO and its highlights?

For measuring the performance of an insurance company, its embedded value is one of the main parameters to review. The embedded value of LIC as of September 2021 was Rs. 5.39 trillion. LIC has filed its DRHP with SEBI on 13th February 2022. According to the DRHP, The government which owns 100% of the stake in LIC is providing a 5% stake through The IPO. This stake represents 31.6 crore shares out of the total outstanding shares of the company. The shares are estimated to be priced at Rs. 2000-2100 per share approximately. The IPO is in the form of an Offer For Sale and the government aims to raise approximately Rs. 1,00,000 crore towards the disinvestment target. 

Who can apply for the LIC IPO?

The IPO is available for retail investors as well as Qualified Institutional Buyers (QIB) to the tune of 35% and 50% respectively. Apart from these investors, the IPO also reserves 10% of the IPO for existing policyholders and 5% for the employees of LIC. 

The DRHP for LIC IPO has set some specific qualifications for the especially policyholders and the employees to meet in order to be eligible for applying for this IPO. These conditions are mentioned hereunder. 

1. The policyholder should have a valid PAN card attached to their policy and updated on the LIC portal. The last date to link the PAN card to their policy for this purpose was 28th February 2022.
2. The policyholders need to have a valid Demat account.
3. The policy needs to be issued on or before filing the DRHP with SEBI i.e., before 13th February 2022.
4. The policy needs to stay on record on the LIC portal and not removed on account of withdrawal of the policy, surrender, maturity, or settlement of death claim as on the offer opening date.
5. The proposer of a policy in the name of a minor child can subscribe to the IPO.
6. The ‘Karta’ of the HUF having a HUF policy is also eligible to subscribe to the IPO.
7. The eligible policyholders will not be bound by any lock-in period to hold the shares subscribed through the IPO.

How can LIC employees apply for LIC IPO?

The IPO has reserved 1.58 crore shares for the employees of LIC under a separate quota that can be used to subscribe to the shares by them. Each retail investor can invest up to Rs. 2,00,000 in the IPO. Furthermore, policyholders could invest up to Rs. 4,00,000 in the IPO. The employees of LIC have a greater advantage in the IPO as they can qualify under the category of retail investors. Therefore, they can subscribe up to Rs. 4,00,000 shares as per the guidelines of DRHP. In the case of employees who also have a policy with LIC, they can invest in the IPO to the tune of Rs. 6,00,000 (as they also meet the criteria of being retail investors as well as eligible policyholders) provided they meet all the terms and conditions set under the DRHP. 

The steps to apply for the LIC IPO are mentioned below.

1. Visit the broker app and select the LIC IPO.
2. Visit the IPO information page and select ‘Employee’ from the investor category thereafter clicking on ‘Apply Now’.
3. Submit the completed bid form with all the necessary details and approve the mandate received from the sponsor bank.
4. Once the bank mandate is accepted, the employee’s subscription application is approved. However, it is not a guarantee of allotment of shares.

Who cannot apply for LIC IPO?

While the IPO is open for existing policyholders, employees, Qualified Institutional Buyers (QIB), and National Institutional Investors (NII), it also expressly states the persons who cannot apply for the LIC IPO. Following persons are disqualified to take part in the LIC IPO,

1. NRIs who may be policyholders cannot take part in the IPO as they disqualify the condition laid in the DRHP that the investor has to reside in India during the bid or the offer period to be eligible for the IPO.
2. In The case of joint policyholders, only one of the policyholders can apply for the shares under the IPO. Also, when the joint policyholders are also joint holders of a Demat account, only the primary or the first account holder can apply for shares under the LIC IPO.
3. The spouse of the deceased annuity policyholder receiving benefits in the form of annuities will not be eligible for the LIC IPO.
4. The nominees of the policyholders are also not eligible for the LIC IPO as only eligible policyholders will be able to bid in the IPO.
5. Policyholders who are part of a group insurance policy are again disqualified to take part in the LIC IPO.

Conclusion

LIC IPO is being targetted as the biggest IPO in the country and is expected to raise a huge amount to meet the disinvestment target of the government. This IPO can be subscribed by existing policyholders as well as employees of LIC along with other eligible investors like QIB, NII, etc. This IPO is an excellent opportunity for the employees to subscribe to the shares of LIC and include them in their short-term or long-term portfolios. 

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