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Things to Know Before You Apply for a LIC IPO

HomeFinanceThings to Know Before You Apply for a LIC IPO

A Brief About a LIC IPO

The Most awaited moment in history for investors is the LIC IPO, which will take place in the mid-month of March. The govt of India planned to launch an IPO for LIC in its 2020 budget. The DRHP for the LIC IPO was signed on February 13th. According to the filing with India’s Securities and Exchange Board, the government is offering 31.62 crore shares, or 5% of the equity, in the IPO. By March 2022, the Centre hopes to have the IPO and subsequent listing of LIC on stock markets.

The goal of this IPO is to promote greater discipline and transparency in the firm’s operations and provide retail investors with the opportunity to invest in the company. A public offering does not imply LIC’s privatization because privatization and listing are distinct concepts. However, the government intends to sell a portion of its interest through this IPO. 

Things You Should Know Before You Apply for a LIC IPO

  • The disinvestment of equity in LIC was initially proposed by India’s finance minister, Ms. Nirmala Sitharaman, during the Union Budget 2020.
  • The LIC Act of 1956 has been revised to ease the implementation of IPO. According to the agreement, LIC will become a publicly traded business and issue quarterly earnings reports and balance sheets. Furthermore, all advancements inside the company must be made public following the IPO.
  • To participate in the proposed public offer, LIC has requested its policyholders to update their Permanent Account Number (PAN) and ensure a valid Demat account.
  • Global investors such as BlackRock and Blackstone have reportedly expressed interest in the potential IPO’s anchor issue. Mr. Arjit Basu, a former MD of SBI, has been appointed consultant for this event. Milliman Advisor LLP India is in charge of calculating the embedded value of the firm, and KFintech has been appointed as a registrar.
  • The overall valuation of the first public offering is now projected to be between Rs—70,000 and Rs. 1 lakh crore. According to the prospectus, the LIC IPO price band will be determined in due course two days before the public offer opens.
  • According to the initial prospectus, the embedded value of LIC as of September 30, 2021, is Rs 5,39,686 crore. For the first time, the insurer has disclosed its embedded value, an actuarial measure used to determine the worth of life insurance.
  • The embedded value considers the life insurer’s adjusted net worth, including free surplus and capital, as well as the discounted value of future revenues from in-force policies.
  • According to the DRHP, LIC’s assets under management (AUM) amounted to Rs 39.6 lakh crore as of September 2021.
  • As of March 31st,2021, LIC had a 66 percent market share in New Business Premiums, with 283 million policies and 1.35 million agents.

What is the LIC IPO GMP (Gray Market Premium)

As we all know, the LIC IPO can be beneficial for you with an issue price ranging from Rs 2000/- to Rs 2100/ this is an estimate according to brokers; the GMP for the LIC IPO is very high. If you locate a good enough LIC IPO GMP, you can transfer your shares to others. Higher LIC IPO GMP means more significant profit for those who receive LIC IPO allocation. Furthermore, the transaction for obtaining GMP price is non-official to conduct it following trading rules. As a result, according to the calculations, the LIC IPO GMP 2022 will be pretty high.

Who Can Apply for a LIC IPO

Anyone with a Demat account is eligible to apply for the LIC IPO. When the firm announces the allotment, some will get granted a specific number of lots of shares based on their application.

The LIC policyholders can avail of the shares at a 5% discount. The policyholders will get not more than 10% of the total shares. You must link your PAN Card to your LIC policy to receive the discount.

A minimum of 35% of the portion will be aside for retail investors to buy shares from that portion. 

How to Apply for a LIC IPO? 

Currently, it is not active, but once the stock is listed on the exchange, you could apply for LIC IPO. Individuals can begin purchasing IPO stock as soon as the underwriting bank determines the price and begins trading on the exchange. When it starts, You Can apply from IIFL Securities to buy and sell stocks quickly. Investors will have many possibilities to purchase shares with its app. You can easily invest in stocks.

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