LIC IPO Date to Share Price: All Your Frequently Asked Questions Answered

LIC IPO (FAQs): LIC has filed its DRHP on Sunday with SEBI. A total of over 31 crore shares will be sold to the public in the initial public offer (IPO). India.com brings answers to all your frequently asked questions on LIC IPO.

New Delhi: LIC has overall 29 crore policyholders in India. Investors across the nation are eagerly waiting for the biggest public offer, LIC IPO, to hit the bourses soon. The LIC has filed the Draft Red Herring Prospectus (DRHP) for the LIC IPO with SEBI on Sunday revealing the details of the offer. Here is all you need to know about the much anticipated IPO. India.Com brings to you the Frequently Asked Questions (FAQ) on one of India’s most awaited IPOs in history.

When will LIC IPO be launched?

The regulator, the Securities Exchange Board of India (SEBI) will most likely clear the offer in the coming days. It is expected that the company will complete the IPO process and the listing by March 31, 2022.

How can you apply for LIC IPO?

One needs to have an active Demat account to buy LIC IPO or for that any IPO. The Demat account is where your securities will be held digitally.

What Is LIC’s Embedded Value (EV)?

According to the DRHP, the embedded value has been set at Rs 5.39 trillion. Usually, the companies trade at around 3-4 times the EV.

What is the expected Market Cap of LIC after the IPO?

According to media reports, the market capitalization of the company after listing can be around Rs 22 lakh. This would make it the largest company in India. Currently, Reliance Industries has the largest M-cap of around Rs 16 lakh crore.

What is LIC IPO Face Value?

The face value of one equity share, according to DRHP, is Rs 10. The company will sell up to 31.62 crore shares.

What is the expected share price?

Various experts have forecasted the share price of the upcoming IPO. According to most, the price per equity share can fall anywhere between Rs 1,693 and Rs 2,962.

Who can apply for LIC IPO?

• Anyone with a Demat account can apply for the LIC IPO. When the allotment is announced by the company, some of them will be given a particular number of lots of the shares, according to their application.
• The  LIC policyholders will most likely be given the shares at a discount of 5 per cent. A total of not more than 10 per cent of shares have been reserved for the policyholders. You will have to link your PAN Card with your LIC policy to avail the discount.
• A minimum of 35 per cent of the issue will be reserved for retail investors.

Will LIC employees get any discount in IPO?

LIC has reserved 5 per cent shares for its employees. They will be issued the shares at a discount of 5 per cent, according to various media reports.

How many shares have been reserved for retail investors?

At least 35 per cent of the shares have been reserved for retail investors. The Qualified Institutional Investors (QIB) will be allocated up to 60 per cent of the shares.

How to invest in LIC IPO?

The company will invite applications for the mega IPO in the coming weeks. The interested investors can apply for the IPO.

After the application process, the company will announce the allotment of shares. The shares will be allotted according to the application status of the LIC IPO. The company has already reserved shares for its policyholders and employees.

After allotment, the shares will be listed on the share markets before March 31, 2022.

How much stake will the government dilute in LIC IPO?

The government has notified that it will sell 5 per cent of the total capital in the form of shares. So, it will retain a 95 per cent stake in the company.

What is in LIC IPO for the government?

The total proceedings from the IPO will go to the government. It is expected to mop up somewhere between Rs 50,000 crore to Rs 1 lakh crore from the public issue. It will offer a big boost to government revenue ad help it is reducing the fiscal deficit.

The proceedings will also help the government to meet the disinvestment target of Rs 78,000 crore for the current fiscal.

How Big Is LIC?

• LIC is the largest life insurer in the country. The total capital of the company is around Rs 6,320 crore. According to the DRHP, the total Assets Under Management (AUM) of LIC are Rs 39.55 trillion. This is more than 3 times the total AUM of all private life insurers in India.
• LIC also has high investments in listed equity. Out of the total market cap of NSE, LIC alone holds 4 per cent through its investments.
• In terms of life insurance premiums, LIC ranks 5th globally. Germany’s Allianz SE has the largest life insurance premium in the world.

How Did Covid-19 impact LIC?

Covid 19 pandemic has increased the number of total claims by death. According to DRHP, the company paid Rs 23,926 crore in FY2021 to the policyholders. In the first six months of FY2022, the company had already paid Rs 21,734 crore.

In FY2019 and FY2020, these figures stood at Rs 17,128 crore and Rs 17,527 crore respectively.

Will LIC IPO be profitable?

The investors will have to analyse the pricing of the issue before investing in the IPO. Investors need to take into account the high volatility in the markets. However, the wide base of 29 crore policyholders is expected to help the IPO sail smoothly.

Will investors be taxed on the sale of Equity Shares?

Under current Indian tax laws, unless specifically exempted, capital gains arising from the sale of equity shares held as investments in an Indian company are generally taxable in India. “Any capital gain realised on the sale of listed equity shares on the Stock Exchanges held for more than 12 months immediately preceding the date of transfer will be subject to long term capital gains in India at the specified rates depending on certain factors, such as whether the sale is undertaken on or off the Stock Exchanges, the quantum of gains and any available treaty relief,” the LIC Draft Prospectus says.

Also, you may be subject to payment of long-term capital gains tax in India, in addition to payment of Securities Transaction Tax (“STT”), on the sale of any Equity Shares held for more than 12 months immediately preceding the date of transfer. STT will be levied on the seller and/or the purchaser of the Equity Shares and collected by the domestic stock exchange on which the Equity Shares are sold. Further, any capital gains realised on the sale of listed equity shares held for a period of 12 months or less immediately preceding the date of transfer will be subject to short term capital gains tax in India as well as STT.

LIC IPO Draft Red Herring Prospectus (DRHP) Download PDF