The subscription was primarily driven by domestic investors, mainly retail, even as FPIs gave the issue a miss amid a global risk off sentiment amid rising bond yields
LIC IPO | IPOs | stock market listing
Insurance behemoth Life Insurance Corporation’s (LIC’s) initial public offering (IPO), India’s biggest-ever, saw 2.95 times more demand than shares on offer, generating bids worth Rs 43,933.50 crore.
The subscription was primarily driven by domestic investors, mainly retail, even as foreign portfolio investors (FPIs) gave the issue a miss amid a global risk off sentiment amid rising bond yields.
The policyholder’s portion saw the maximum subscription at over 6 times, generating bids worth over Rs 12,000 crore. The employees portion was subscribed 4.4 times, and retail individual investors portion saw 2 times subscription, with bids worth over Rs 12,450 crore.
The IPO saw retail applications around 7.33 million applications, highest-ever for a domestic IPO, topping Reliance Power’s 2008 record of 4.8 million applications.
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Meanwhile, the qualified institutional buyer (QIB) and high net worth individual (HNI) categories were subscribed 2.83 times and 2.91 times respectively. These two categories generated bids worth Rs 18,815 crore. FPIs submitted bids of less than Rs 2,300 crore.
The offer received bids for 47,83,67,010 shares against the offered 16,20,78,067 equity shares (excluding shares offered to anchor investors), as per the data available on the bourses.
LIC’s strong brand recall coupled with additional discount enthused many first-time investors and small shareholders towards the IPO. The government had set the price band for the IPO between Rs 902 to Rs 949 per share, with an additional discount of Rs 45 and Rs 60, for retail and policyholders, respectively. The IPO opened for subscription on May 4 and was open during the weekend also.
Last week, the insurance behemoth raised Rs 5,627 crore from anchor investors, with 71 per cent of the amount coming from domestic mutual funds (MFs). In total, the state-owned insurance giant allotted nearly 59.3 million shares to 123 investors at Rs 949 apiece, with 42.17 million shares allotted to 15 domestic mutual funds through 99 schemes.
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The government was looking to raise Rs 20,557 crore by diluting 3.5 per cent stake in the state-owned insurer, making it the biggest public offering of the Indian capital market. Initially, the government was looking to dilute 5 per cent stake in the insurer but given the volatile market conditions due to geo-political tensions, it decided to reduce the equity dilution.
At the upper-end of the price-band, LIC will have a market cap of Rs 6 trillion, making it India’s fifth most valuable firm. The insurance giant had an embedded value (EV) of Rs 5.4 trillion as on September 2021. The IPO values the insurer at 1.1 times EV lower than private sector peers which currently trade between 2 and 3.5 times their EV.
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