Last Updated on January 15, 2024 by Ali Hamza
As we all know, LIC IPO is the most anticipated IPO in our country. It will soon reach the markets for investors to invest. While it reaches the market, you need to know some basic knowledge about it and procedures to get the policy. LIC has created reservations for this policy like Policyholders, Employees, Qualified institutional buyers, Non-Institutional buyers, and Retail buyers.
Various reservations come as mentioned before to apply for LIC IPO Like for policyholders, the investors who will apply should have a LIC policy so that you can get in that 10% reservation. Now, to avail of this, you need to fulfill the necessary conditions to get your chances to get the IPO. First is the LIC policy that you should have, second is the PAN card linked with the policy and the final thing is the Demat account. All this will help you apply for the LIC IPO and increase your chances of getting it.
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- The IPO’s cost is not cheap for the company; they need to hire lawyers, investment bankers, and accountants are required. They often also need consultants from outside that can help the company with the process.
- Going public for a company like LIC also means that the company information and data will be publicly available. There will be periodic audits and public reporting, which the company will have to do and adjust with this change.
- During this period, the company has to spend a lot of its time and energy on the IPO process, which will change the company’s focus from what they were doing before to what they are doing now.
Advantages of Applying for a LIC IPO
- The most important is the brand itself. The name LIC is a very wide known policy insurer, that is why it is known as the country’s largest insurer. With a market share of 64.1% based on premium.
- Insurers’ operations and governance will become more open with the LIC IPO.
- The LIC IPO will attract a large number of individual investors and overseas investors.
- Since the government has agreed to sell only 10% of the stakes, the Indian government will retain complete control over the operations.
- In this offer by LIC, there will be no more than a 5% reservation offered to eligible employees.
- If you apply for a LIC IPO, there will be a 10%reservation offered to policyholders, and there might be a discount on the premium.
- IIFL Securities will also be there helping their customers with the LIC IPO. You can apply through IIFL to get the best LIC IPO when the IPO launches.
- The company will need to show its financial reports in detail, and the company will have to be more transparent as it is going to provide IPO to its investors.
How it is Advantageous to the Company
- From this IPO, the government wants the company to earn money to recover from the losses during the pandemic.
- With this IPO, the company aims to collect Rs 50,000cr to Rs 1,00,000cr, depending on the offer price.
- With this money that the company collects from the LIC IPO, it can help develop the capital market and improve the country’s economic growth.
- The new investors can also share their insights and expertise with the company, which will indirectly help the company to grow more.
- As India’s largest insurance provider LIC will get its needs fulfilled by this IPO; if the company wants, they can take over other insurance companies to earn more profits.
Disadvantages of Applying for a LIC IPO
- The size of this IPO is very large and which can cause a lot of problems in the listing gains.
- Private firms are also catching up with LIC with a determination to capture the market share, which can happen sooner or later.
- You may or may not get the IPO even though you may fulfill the criteria that the company has put forth. As the demand is high for this IPO, there are few shares the company is giving to the public. It will create problems, and many investors could not get the IPO due to high demand in the market.