LIC IPO: Life Insurance Corporation of India has reserved 35 percent of its IPO for retail investors. This information has come out from the draft papers submitted to the market regulator SEBI. The life insurance company is expected to launch an IPO of 31.62 crore equity shares in March. This is purely an offer for sale brought for sale by the Government of India. The government has a 100% stake in the company.
Investors excited about IPO after the pandemic
Most of the IPOs launched since the pandemic have seen retail investors being very excited, as they have been the leading bidders. In fact, they have been at the forefront of providing support for the primary as well as the secondary market for over a year and a half.
Experts feel that a large number of demat accounts are expected to open in India before the launch of LIC IPO and if this happens, the government’s income through Security Transaction Tax (STT) can also increase significantly.
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1 crore new demat accounts can be opened
Santosh Meena, Head of Research, Swastika Investmart said, “It is expected to hit the market soon, which can open at least 1 crore new demat accounts and this can be a big positive for the Indian market. . If 10 per cent of its investors remain active, it will increase the participation of retail investors and this will help the government to increase its revenue through STT.”
Apart from the positive aspects, it may have some negative impacts on the secondary market, as it may drain liquidity from the secondary market, he added.
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15% offer for non-institutional investors
Half of the offer is reserved for Qualified Institutional Buyers (QIBs) and 15% for non-institutional investors.
Further, the Corporation may, in consultation with merchant bankers, allot 60 per cent of the QIB portion to anchor investors, of which one-third is reserved for domestic mutual funds.
LIC IPO: 10% of the issue will be reserved for policyholders, the value of the company will be Rs 5.4 lakh crore
What will happen with less subscription from anchor investors?
LIC said in its DRHP, “In case of short subscription or non-allocation of the anchor investors’ portion, the remaining equity shares will be added to the net QIB portion.”
Further, 5 per cent of the Net QIB Portion will be available for allocation to Mutual Funds and the rest of the QIB Portion will be available for allocation to all QIBs including Mutual Funds on a pro-rata basis.
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