Life Insurance Corporation (LIC) chairman, MR Kumar has informed that the subscribers of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) are eligible for LIC initial public offering at a discount. “PMJJBY is part of that and reservation will be there (for the policyholders),” Kumar said in an interaction with the media.
As per the draft red herring prospectus submitted by LIC with the markets regulator SEBI recently, 10 per cent of the total LIC share offer will be kept reserved for the LIC policyholders. There are also speculations about discounts. However, the LIC has not yet announced any plan for offering discounts to the policyholders in the proposed initial public offer (IPO).
LIC IPO: What is PMJJBY?
The PMJJBY is an insurance scheme launched by the prime minister for people in the age group of 18 to 50 years. Launched in 2015, PMJJBY offers a renewable one year life cover of Rs 2 lakh to all savings bank account holders, covering death due to any reason, for a premium of Rs 330 per annum per subscriber. This government scheme is offered or administered through LIC. As per the Draft Red Herring Prospectus (DRHP) filed last week, the maximum bid amount under the Policyholder Reservation Portion by an eligible policyholder would not exceed Rs 2,00,000 (net of policyholder discount).
LIC IPO: How to Apply?
LIC policyholders having one or more policies as on the date of the DRHP and bid/offer opening date and are residents of India would be eligible to apply under the ‘policyholder reservation portion’ category. They will have to ensure that PAN details are updated in the policy records of the company by February 28. A policyholder can apply only from his own demat account. In fact, NRI policyholders or other policyholders residing outside India cannot apply for this offer in this category.
LIC IPO: IDBI Stake
The state-run life insurer may not sell its entire stake in IDBI Bank and can use its large network of branches to market its insurance services, Kumar further said. Its majority stake in IDBI Bank, which it rescued in 2019, is seen as a risk to its balance sheet.
“I would like to have some stake in IDBI Bank. It has been the strongest contributor to the bancassurance channel for us. This will help us to grow that part of the channel,” said Kumar in a press conference with reporters on Monday.
India’s government and LIC hold over 90 per cent stake in IDBI Bank, which had assets of over 2,900 billion rupees ($38.91 billion) at the end of December and over 1,800 branches across the country. LIC took over the lender when it was weighed down by bad loans and needed a new infusion of capital.
LIC issued approximately 21 million individual policies in FY 2021, accounting for nearly 75 per cent of new individual policy issuances. The IPO is offer for sale (OFS) by Government of India. There is no fresh issue of shares by LIC.
The government holds 100 per cent stake or over 632.49 crore shares in LIC. The face value of shares is Rs 10 apiece. The LIC public issue would be the biggest IPO in the history of the Indian stock market.
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