New Delhi: The Life Insurance Corporation of India (LIC) has fixed the price band at Rs 902-949 per share for the initial public offering (IPO) that is likely to open on May 4.

The government aims to raise around Rs 21,000 crore from the public issue by divesting a 3.5% stake in the insurance giant.

The insurance giant would offer a Rs 60 discount for policyholders and Rs 40 for retail investors and employees.

However, only those LIC policyholders will be eligible for this discount who bought their policy on or before 13th April 2022, the day LIC filed its draft red herring prospectus at the Securities and Exchange Board of India (SEBI), Livemint reported.

The issue is likely to open for subscription on May 4 and is expected to close on May 9.

The bid lot would be 15, which means an applicant will be able to apply for the IPO in lots and one lot of the public issue comprises 15 LIC shares.

Anchor investors can subscribe to the shares of the insurance company on May 2.

With this IPO, the government would offload a 3.5% stake in the insurance behemoth by selling 221.3 million shares.

After policyholders and shareholders' reservations, the remaining shares will be allocated in the ratio of 50% for qualified institutional buyers (QIB), 35% for retail investors and 15% for non-institutional investors.

Sources said 60% of the QIB portion has been reserved for anchor investors.

The LIC IPO is an offer for sale (OFS) by the Government of India and there will be no fresh issue of shares by the insurance giant.

In an OFS route, promoters in public companies can sell their shares and reduce their holdings in a transparent manner through the bidding platform for the Exchange.

The Wire had reported in January that a citizen’s platform named Peoples’ Commission on Public Sector and Public Services raised a number of "red flags" urging the government to “pause and ponder ” over the concerns raised by them regarding the LIC IPO.

“95% of LIC’s profits come back to the policyholders. It is they who have funded LIC’s phenomenal growth over the decades. LIC and its policy holders have a symbiotic relationship, each having a huge stake in the other. In the normal course, therefore, it is they who should play the pivotal role in determining the trajectory of LIC’s future growth,” the commission had said.

However, according to an explainer in the Indian Express, LIC will not receive any proceeds from the offer.

The LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal, as per the PTI report. The government has pegged disinvestment receipts at Rs 65,000 crore for the current financial year, up from Rs 13,531 crore raised in the last fiscal.

(With inputs from PTI)