LIC IPO: Company fixes price band with discount for employees, policyholders
A discount of Rs 45 per equity share will be given to LIC employees along with retail investors on subscribing the company's shares. Similarly, LIC policyholders will receive a discount of Rs 60 per share.
FollowEmployees of the Life Insurance Corporation of India (LIC) would receive a discount on subscribing to the company's shares in its first public offering (IPO). The government had previously fixed a price band of Rs 902-949 per share and will give a discount to retail investors in addition to LIC personnel.
A discount of Rs 45 per equity share will be given to LIC employees along with retail investors on subscribing the company's shares. Similarly, LIC policyholders will receive a discount of Rs 60 per share. However, only LIC policyholders who purchased their insurance on or before April 13, 2022, the day LIC filed its draught red herring prospectus with the Securities and Exchange Board of India, will be entitled for this discount.
When a business goes public by issuing an IPO, it permits its workers to participate in the public offering. It accomplishes this in two ways: either by reserving a portion of the shares for them or by offering them a discount off the floor price. Both of these techniques are typically regarded as methods of rewarding employees for their service and commitment to the organisation.
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The reservation of share-issue boosts the likelihood of workers receiving shares in popular IPOs, such as the one LIC is planning to issue. The employee discount is likewise meant to achieve the same goal.
The government will sell 221.3 million (3.5% of LIC) shares. 1.5 million shares are designated for insurance firm workers, while the remaining 22 million shares are held for policyholders.
The Centre hoped to launch the insurance behemoth's initial public offering (IPO) around March 2022 in order to satisfy its revised disinvestment objective for the preceding fiscal year. However, Russia's declaration of war on Ukraine on February 24th thwarted that strategy. It should be noted that the amount of the LIC IPO has also been reduced in light of the global market condition in the aftermath of the Eastern Europe crisis.
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