Why the government is selling LIC shares at a low price? | Things to know before investing money in LIC IPO

Things to know before investing money in LIC IPO:

LIC is India's biggest IPO to date, which is very interested. Many such people of people who have never invested money in the market till now, maybe they are also going to come. LIC agents were explaining to them who these people are for a long time. If there are policyholders of LIC, then a separate quota has also been given to the policyholders of LIC. That's why they are interested. 

A lot of people are trying to invest money in LIC's IPO. We are hoping that they will get an allotment, and there is a possibility that many people will get an allotment. However, that is not a legal parameter. Like Paytm IPO, we are also trapped in this affair, this is the gray market premium i.e. which is the unofficial market, where illegal deals are happening when you get the shares, what will you do, and if you do not get a share then you should want to take from me. 

Today you give me an advance when the share will allot; I will take your share of it on that day. This is called a gray market. It is kind of a black market. Most of the cities have such deals in this. Today we have set the sentiment amongst ourselves. There has been so much profit, so much loss, profit and loss, no share has to be taken, or I have to give it, because then when all your transactions are done, accounts will be done, then maybe you will get trial.

This is such a deal in which no one is involved in the transaction anywhere. There is a work of trust amongst themselves, but this is the work of such trust. A lot of new people go and get trapped in this. It is important to note that the premium for the gray market right now has reached ₹77. LIC has fixed the Price band from INR 902 - INR 949. There are different types of discounts to get the price between INR 902 - INR 949. 

But above it, the price of 75 to 70 rupees was run that if you now understand at this price. Around ₹949 to ₹77, if added around ₹10 to ₹125, it's not a huge gray market premium. See already, what is the reason for the big IPO? You are above 20,000 crores because of this probably people expect that most of the people will apply. They will get shares. SEBI have also changed the rules of IPO. In that category which is the non-institutional investor category, in that also small non-institutional investors and big non-institutional investors are separating it. 

With this, if the quota of small people is separated in it, then the possibility increases. In some cases, the gray market remains high even on the day of listing, and on that day it means that it will be a good listing. The listing may be very high, which is very expensive for the rest of the company listing and the gray market premium goes further, but this is not usually the case in a big IPO. The last example that has come to the fore is that of Paytm. This is being discussed in the market.

Reliance is a well-known company for making the most money from the market. In India, she is preparing to bring Reliance Jio and Reliance Retail's IPO. Such news is coming, and they will be a very big IPO. There is talk about her that she can raise INR 75,000 crore. This means that what we are saying right now is that LIC's IPO is India's biggest IPO which is not only 50 to 75000 crores. Its assessment of up to 1.5 lakh crore has been done in between. 

The source from which it has been discussed is that this IPO can be so big, but finally it will reach around 20,000 crores, it is the biggest IPO for a long time. It cannot be said. Despite this, keep in mind that if someone is investing money in LIC. Seeing the business of LIC, he should invest money by looking at the prospects of LIC's long future, and not thinking that he will apply today and on the 19th of May, it is also a very miraculous thing that the news has already come that on the 19th may this stock will be listed.

After the IPO, companies usually tell when the listing will take place. Here the listing has been announced on the 19th of May, so if you are going to invest money thinking that you are going to get a huge lottery on the 19th of May, then think twice. If you think LIC is the biggest insurance company in India. He has a lot of investments, his kind of supermarket, in which you are going to invest money and keep it with you for a long time. 

Then think of investing money in LIC, but if you are going to invest for a momentary profit, then your bet may backfire. It is not necessarily. You may gain a listing, but may not. One must be prepared for that situation. And if you are not ready for that then like I said think again think four times, think eight times, whether to invest or not to invest. If you are ready for a long period, then you can apply without thinking because LIC is not such a company that you also have to think about whether this company will be there tomorrow or not. 

On the contrary, the big advantage of listing LIC is going to be that the business of Life Insurance Corporation will now come into the public eye. Till now, from where did LIC spends the money for what it used to do. What is LIC doing on its entire functioning and through LIC which affects other companies, in which company LIC has invested the money?

LIC IPO Details:

This is the biggest IPO. LIC's IPO opened today, May 4. For this, investors can bid till May 9.

The price band of IPO is between ₹902 to ₹949. There are 15 shares in one lot IPO.

That is, at least INR 14,235 will have to be put for bidding.

A retail investor can apply for a maximum of 14 lots. ₹ 1, 99,290 will have to be invested for the application of 14 lots.

LIC employees and retail investors will get a ₹45 per share discount. The same policyholders will be given a discount of ₹ 60 per share.

The government will sell a 3.5% stake in LIC through SIP.

Through this, the government has a plan to raise INR 1000 crore and the IPO is completely offered for sale.

According to the information, 50% of LIC's IPO will be reserved for Qualified Institutional Buyers, which includes anchor investors.

So on the other hand, more than 15% of the IPO will be reserved for non-institutional investors, i.e. NR Is. If 35% will be reserved for retail investors, then the same 10 % will remain for the policyholders of this LIC and 5% for employees.

According to the statement, the valuation of LIC is quite attractive. The participation of retail investors will be good in this IPO.

Will money be made in LIC's IPO?

By announcement, it is the country's largest assurance company. LIC controls more than 66% of the country's insurance business. LIC manages a fund of INR 39, 00,000 crores of investors and policyholders. 2048 markets across the country, 113 divisional officers, and one thousand 554 officers are believed to be amongst the top companies in the country in terms of the insurance market. 

The most important thing is that after LIC, there are shares of four listed companies in the country. This means that LIC has a huge investment in the stock market. Apart from this, LIC also has investments in government boards and securities. The country's veteran investor Sameer Aurora thinks that investors should put money in LIC's IPO. LIC's share price is very attractive.

Based on the current valuation, the share price of LIC looks quite affordable. Overall, investors should start arranging funds to invest in LIC's IPO. Due to the large size, most retail investors may get the shares. But you must take the advice of market experts before investing money in LIC's IPO because investing money in IPO can be risky. The country's biggest IPO i.e. LIC's IPO was being eagerly awaited. But on 2nd May, LIC opened for anchor investors. 

The anchor investor portion of LIC had become oversubscribed on the very first day itself. If sources are to be believed, LIC's IPO had received INR 7000 crore bids from anchor investors. Whereas, the government had a plan to raise INR 5,630 crores from anchor investors. Northern Bank Investment Management and GIC (General Insurance Corporation of India) have invested in LIC as anchor investors. Norway Bank is the sovereign wealth fund of Norway, while GIC is the sovereign fund of Singapore.

Many people will not know who are anchor investors, and why anchor investors are needed for IPO?, Why IPO is opened first for these anchor investors? The answers to all these questions will be given to you as well. First Foremost, know who are anchor investors, if investors are institutional investors. An institutional investor is a company or institution that invests money on behalf of other people, such as mutual funds, pension, and insurance companies. 

Institutional investors buy a substantial share in any stock. These investors also act as anchors. If well-known anchor investors join the list, then the line of any IPO rises. Such investors also help in deciding the right value of IPO. This increases the chances of the IPO being successful, which is good for both the investors and the company. The government has a plan to raise INR 21,000 crores from this IPO. Hence, the proceeds from the share sale will go to the Government of India. 

This means that the LIC will not get any money from this IPO. Let us tell you that before the arrival of LIC IPO, SEBI have notified easy rules for anchor investors, under which the lock-in period has been reduced to 30 days of shares received by them anchor investors. The rule is applicable for public issues above INR 10,000 crore till June 30. Due to this move of SEBI, LIC will get more investors. 

Now, the last thing is why a company needs to issue an IPO. Any company needs money to increase its work and only to fulfill this need of money, a company issues IPO. After listing in the stock market, the company raises money by selling its shares. In return, the people who buy the IPO get a stake in the company. Meaning, when you buy shares of a company, you become the owner of the purchased part of that company.

Do you know, When the country's first IPO was listed, and who brought it?

Let us finally give you some interesting information related to IPO. Reliance Industries Limited launched the first IPO of independent India in 1977. Its issue size was ₹2.82 crore. Reliance's founder Dhirubhai  Ambani launched four major IPOs within five years after economic liberalization in 1991. Everyone got a very good response, but investors did not see any significant gains. Later, all the companies that brought the IPO were merged, and Reliance Industries merged with today's RIL.

We hope you enjoyed our article " Why the government is selling LIC shares at a low price? | Things to know before investing money in LIC IPO." The country's biggest IPO i.e. LIC's IPO was being eagerly awaited. But you must take the advice of market experts before investing money in LIC's IPO because investing money in IPO can be risky. If you have any questions, please comment on our site www.tradeipohub.co.in. Thanks for reading.