LIC policyholders can apply for IPO at a discount: Here are answers to FAQs

How to apply for LIC IPO? How much is the discount for eligible policyholders? Are proposers of a policy eligible for reservation? Here are the answers to some FAQs on LIC IPO for policyholders

The mega Initial Public Offering of Life Insurance of Corporation of India (LIC IPO) is being touted as India's Aramco moment. The insurer's listing is set to dwarf the record $2.4-billion IPO of Paytm last year. The government, which owns 100 per cent of LIC, is selling 316 million shares, representing 5 per cent of its equity stake through this IPO.

Currently, LIC is India’s biggest life insurer with 286 million policies. According to the insurer’s DRHP, of the total shares offered in the IPO, up to 10 per cent is reserved for eligible LIC policyholders.

Here are a few important things that policyholders must know:

How to apply for LIC IPO?

For a policyholder to be eligible for IPO under the category, they need to update their PAN details on the LIC portal. Additionally, the policyholder must have a Demat account to participate. In India, subscribing to any public offering is possible only if one has a valid Demat account. What policyholders must know is that they cannot apply for the IPO using their spouse, children or relatives’ Demat accounts.

LIC has asked all its policyholders to update their PAN details in policy records by February 28 to be eligible for participating in the IPO.

Can joint LIC policyholders apply for discounted IPO shares?

Yes. But in a joint LIC policy, only one of the two policyholders can apply for shares under the reserved portion. The policyholder will need to update the PAN number of the applicant bidding in the offer in the policy records.

Additionally, the applicant must have a Demat account in their name. In case the Demat account is joint, the one applying should be the primary holder of the given account.

How much is the discount for eligible policyholders?

LIC has reserved 10 per cent of the issue size for its policyholders and also plans to give a discount to them in the IPO.

However, currently there is no clarity on how much the discount for policyholders will be.

Is there a lock-in period?

No, there is no lock-in period and the policyholders can sell these equity shares, if they choose to do so, immediately after the listing on the bourses.

What if one doesn't have an existing LIC policy?

Those who do not have an LIC policy can participate in the IPO sale under the "retail" or "institutional" investment category.

Are proposers of a policy eligible for reservation under the Policyholder Reservation Portion?

Yes. A proposer is the owner of a policy. Therefore, they are eligible under the Policyholder Reservation Portion