The largest Initial Public Offering (IPO) in the history of Indian markets, LIC IPO got a 67 per cent subscription on May 4, the first day of bidding.
LIC’s IPO opened on May 4 and shares will be auctioned till May 9, where the government is selling a 3.5 per cent stake in the company. The LIC IPO price band has been set at Rs 902 to Rs 949 per equity share, with discounts for some categories.
According to LIC management, there is Employee reservation of 1.58 crore shares while 2.21 crore shares are reserved for policyholders. Retail Investors and Employees will get a discount of Rs 45, while Policyholders will get a discount of Rs 60.
What Is an Initial Public Offering?
An Initial Public Offering (IPO) refers to the process of offering shares of a private company to the Retail, High Networth Individuals (HNIs) and Institutional Investors in a new stock issuance and getting its name listed on the stock exchange. The IPO market is described as a primary market where firms look to access long-term capital.
How does an Initial Public Offering (IPO) Work?
Before an IPO, a company is considered private. As a private company, the business has grown with a comparatively small number of shareholders including early investors like the founders, friends and family along with professional investors such as angel investors or venture capitalists. In the case of LIC, the entire 100 per cent equity was with the Central Government.
When a company reaches a stage in its growth process where it believes it is mature enough for the rigours of Sebi regulations along with the benefits and responsibilities to public shareholders, it begins to advertise its interest in going public.
Private companies at various valuations with strong fundamentals and proven profitability potential can qualify for an IPO, depending on the market competition and their ability to meet listing requirements.
How can one apply to LIC IPO online?
People can bid for LIC IPO through offline and online methods. In the offline method, an investor should have a Demat account then the form is filled up physically and submitted to the IPO banker or the broker. To apply for LIC IPO online, an investor has to open a Demat account and a trading account with a financial institution that provides this facility. Most national banks like SBI, PNB, ICICI, HDFC and popular stockbrokers such as Sharekhan, Angel broker offer the facility to apply for IPO online.
How policyholders can buy LIC IPO online through Demat & Trading Account
- Log in to the trading account which is linked to the Demat account
- Click on the IPO section from the menu
- Select the LIC IPO tab. View the category of policyholders. Fill in your details, place the bid and then click on the submit button.
- Accept the mandate from the participating bank
- Select ‘Apply Now’ from the menu. Then, complete the payment option using UPI or any other online payment mechanism, to buy LIC IPO shares at discounted rates.
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