Race for IPO quota: LIC policyholders rush to link PAN with policies

Insurer, Centre expect 10 million to have demat accounts linked to LIC policy by February 28

The Life Insurance Corporation (LIC) of India has started seeing a jump in policyholders linking their permanent account numbers (PANs) to LIC policies, signalling a big response among them to participate in the insurer’s initial public offering (IPO).

More than 1.2 million PANs were linked in the past one week.

About 9.2 million policyholders have demat accounts linked to their LIC policies.

The insurer and the government are expecting the demat accounts of over 10 million policyholders to be linked to their policies by February 28, the last day for the exercise declared by the insurer, officials in the know said.

This compares with unique 50 million policyholders identified by the insurer. LIC has over 282 million policies in force as on September 30, 2021.

The government has reserved 10 per cent of the offer size of the LIC IPO for policyholders subject to the value of the allotment of equity shares not exceeding Rs 2 lakh. The number has given comfort to the government that policyholders are interested in subscribing to the quota. Individuals should have a policy on February 13, the day LIC filed its offer documents, to be eligible for the policyholder reservation.

“The numbers have been impressive and indicate that the policyholders are willing to be shareholders of the India’s largest insurance company,” said an official.

Even as these numbers show 9.2 million policyholders have demat accounts, policyholders without a demat account can also link their PAN by February 28, and open their trading accounts before the launch of the IPO, officials said.

To inform its policyholders about the reservation of shares in the IPO, LIC had started the campaign “it’s best in life to be prepared”, asking them to upload their personal details and PAN, and to open a demat account to subscribe to the insurer’s offer.

It has started another initiative to give opportunities to policyholders to revive their lapsed policies. Policies that have lapsed during the premium-paying term are eligible to be revived in this campaign, which began on February 7 and will end on March 25.

Under the campaign, policies of specific eligible plans can be revived within five years of the first unpaid premium, subject to certain terms and conditions.

The Centre is looking to sell its 5 per cent, or 316 million shares, in the IPO, considered to be one of the biggest offers globally. The embedded value (EV) of the insurer has been estimated at Rs 5.39 trillion, and the government will finalise the valuation of LIC (a multiple of the EV) after consultations with investors.

For the roadshows, the government will approach large investors who haven’t yet anchored any Indian IPO, and those who focus is only on large public offerings in its effort to approach over 180 investors over a 20-day period that started on Monday.