LIC IPO Subscription Status: LIC IPO subscribed 1.7 times on Day 5, HNI portion sails through


New Delhi: The initial public offering (IPO) of Life Insurance Corporation of India (LIC) continued to attract bidders on the fifth day of the bidding process. The issue was fully subscribed on the second day itself.

The largest ever IPO of the Indian primary markets, aggregating to Rs 20,557 crore, is open for subscription till May 09. The retail bidders can bid for the issue even on Sunday, an unusual move aimed at attracting investors.

According to the data from BSE, investors made bids for 27,65,90,685 equity shares or 1.1 times compared to the 16,20,78,067 equity shares offered for the subscription by 12 noon on Sunday, May 08.

Among the five categories, only quota for qualified institutional buyers (QIBs) awaited full subscription, with investors bidding for only 67 per cent of the allocation.

The quotas for retailers, employees, policyholders and HNI investors were fully subscribed. The portion of policyholders was subscribed 4.8 times, followed by 3.6 times subscription for employee’s allocation.

The issue is entirely an offer for sale of about 22.13 crore equity shares by the government of India, which owns 100 per cent stake in the insurer, but will offload only 3.5 per cent stake of the company.

The company will sell its shares in the range of Rs 902-949 apeice but has given a discount of Rs 60 per share to its policyholders, who will bid for the issue.Eligible Employees and retail bidders will get a discount of Rs 45 per share .

The company has reserved 50 per cent of the net issue for the qualified institutional bidders (QIB), where non-institutional bidders (NIIs) will get 15 per cent of the issue. Remaining 35 per cent portion has been allocated to retail bidders.

Life Insurance Corporation of India is valued at Rs 6 lakh crore, which is about 1.12 times its embedded value (EV) of Rs 5.4 lakh crore. It is quite reasonable to its listed peers, brokerages said.

The AUM of LIC jumped about 10 per cent to Rs 37,46,404.47 at the end of financial year 2021 from Rs 34,14,174.57 crore in the previous year. The net profit of the company jumped to Rs 2,974.14 crore from Rs 2,710.48 crore.

For the period ended December 31, 2021, LIC had an total AUM of Rs 40,90,786.78 crore and reported a net profit of Rs 1,715.31 crore.

Majority of the brokerages are bullish on IPO of LIC and have suggested subscribing to it. However, some have raised concerns over its declining market shares, overhang of future stake sales by the government.

“We believe LIC’s listing will broaden the investable universe and further increase the sector’s relevance in investor’s portfolios,” said global brokerage firm Jeferries.

“It will also help investors to better track sector dynamics as LIC disclosures become frequent. LIC has recalibrated its par and non par products ahead of the listing,” it added.

LIC will likely strengthen its omni-channel distribution network for individual products and increase its productivity, said Ashika Stock Broking with a ‘subscribe’ rating on the issue.

“Clearly there’s room for every player in the industry to grow without adopting cannibalism. At the upper price band of Rs949, the issue is valued at a significant discount to private sector valuations,” he added.

LIC operates through 2048 branches, 113 divisional offices, and 1,554 Satellite Offices. It operates globally including in countries like Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait and the United Kingdom.

LIC has garnered over Rs 5,627 crore from the anchor investors by alloting them 5.92 crore shares at Rs 949 per share, the insurer said in a filing to exchanges. Out of them 4.2 crore shares were allocated to 15 domestic mutual funds.

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