lic: LIC’s mega public offering is launched

Mumbai | New Delhi: The country’s largest-ever public issue, by the Life Insurance Corporation (LIC), was underwritten 2.95 times on the last day of auctions on Monday, buoyed by strong demand from retail investors, employees and policyholders of the insurer that millions of ordinary Indians regard as their main shield against the risks of life.

The ₹21,008 crore issue, whereby the Union government sold 3.5% of the insurance giant, received bids for 478.3 million shares against 162 million on sale (excluding the book anchor), depending on the exchange data. The show received more than 7.3 million requests, breaking the 14-year record of Anil Ambani’s Reliance Power stock sale which attracted 4.8 million requests in 2008.

The success of the share sale was largely driven by policyholders and LIC employees, who were among the biggest subscribers to the issue. The participation of foreign institutions in the show, however, was modest in comparison.

“This issue has shown that our capital markets and investors also have the capacity,” said Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Assets Management (DIPAM), which is in charge of the program of sale of government shares. “We cannot depend solely on foreign institutional investors. IFIs are also welcome, but this problem has mainly been raised at the national level. This will help deepen the stock market.

The portion reserved for policyholders was subscribed 6.12 times, while the portion for employees was subscribed 4.40 times. The offers for these two categories solved the problem on the second day.

“Participation from Tier 2 and Tier 3 cities was high for LIC’s IPO. We can attribute this to the deeper penetration of LIC officers and policyholders,” said Girirajan Murugan, CEO of FundsIndia. “We also received a fair amount of applications from newly formed Union Territories.”

The bulk of institutional, HNI and retail investor inquiries came in the last two days of the IPO process. The portion reserved for the retail category was subscribed 1.99 times. The Non-Institutional or High Net Worth Individual (HNI) category and the Qualified Institutional Buyer share saw subscriptions of 2.91x and 2.83x, respectively. The majority of national brokerages had recommended their clients to subscribe to the IPO citing cheaper valuations than those of LIC’s private sector peers. The issue was sold in a price range of ₹902 to ₹949 each.

The pricing was set taking into account the basic intrinsic value as well as the growth potential, and not on the basis of day-to-day fluctuations, said Sanjay Malhotra, secretary of the Department of Financial Services.

LIC prices on the unofficial gray market have fallen in recent days. The gray market premium, seen as a pre-listing sentiment indicator, on the upper end of the ₹949 issue price fell from over ₹85 before the IPO opened to under 40 ₹ Monday.

Pandey said the shares will likely be allotted on May 12 and should be in investors’ demat accounts by May 17. The listing would take place on May 17, he added. “There are a lot of geopolitical factors affecting the market. But it’s like that. Hope everything goes well. We are optimistic and confident about listing day,” Pandey said.

The previous record in terms of the amount raised in a domestic IPO was

the parent of , in 2021.

The company raised 18,300 crore in November last year. State Miner

raised 15,199 crores in 2010. Life’s IPO in 2021 saw the highest number of applications after LIC and Reliance Power.

The five-day issue of LIC opened for subscription on May 4. Approximately 35% of the total shares in the offering are reserved for retail investors, while 10% have been reserved for LIC policyholders. They were offered a 60 per share discount, while retail investors and employees got a 45 discount. The IPO was an offer to sell up to 221.4 million shares of the Indian government. For the first time, the bidding process for the LIC issuance opened on Saturday to facilitate better participation from retail investors. Also, all bank branches designated for ASBA applications (application supported by blocked amount) were kept open to the public on Sunday.

Last week, LIC raised 5,627 crore from 125 senior investors by allocating 59.3 million shares at 949 each, the upper end of the price range, during the pre-IPO sale. Domestic mutual funds dominated the anchor book. Foreign investors participating in the base allocation included Société Générale, the Government of Norway Pension Fund, the Government of Singapore, the Monetary Authority of Singapore and the Ghisallo Master Fund.

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