LIC IPO subscribed nearly 3 times; govt raises Rs 21,000 cr

LIC IPO subscribed nearly 3 times; govt raises Rs 21,000 cr

• By Staff Writer

Life Insurance Corporation's IPO, the country's biggest public offer, was subscribed 2.95 times on the last day of the offer period on Monday, helping the government mobilize about Rs 21,000 crore. Against 16,20,78,067 shares on offer, 47,83,25,760 bids were received, according to data posted on stock exchanges at 7 pm.

Bidders in LIC IPO will be allocated shares on May 12, and the insurance behemoth will be listed on stock exchanges on May 17, said DIPAM Secretary Tuhin Kanta Pandey.

The Qualified Institutional Buyers (QIBs) category was subscribed 2.83 times. As many as 11.20 crore bids were received for the 3.95 crore shares earmarked for the segment.

With regard to non-institutional investors (NICs), a total of 8,61,93,060 bids were received for 2,96,48,427 shares reserved for the category, reflecting a subscription of 2.91 times.

Retail individual investors bid for 13.77 crore shares as against 6.9 crore shares on offer for the segment, translating into an over-subscription of 1.99 times.

The policyholders' portion was subscribed a little over 6 times, while that for employees was subscribed 4.4 times.

LIC had fixed the price band at Rs 902-949 per equity share for the issue. The offer includes a reservation for eligible employees and policyholders. The retail investors and eligible employees will get a discount of Rs 45 per equity share, while policyholders will get a discount of Rs 60 per share.

The government has diluted a 3.5 percent stake in the insurance behemoth through the Offer for Sale (OFS).

LIC reduced its IPO size to 3.5 percent from 5 percent decided earlier due to the prevailing choppy market conditions. Even after the reduced size of about Rs 20,557 crore, LIC IPO is the biggest initial public offering ever in the country.

So far, the amount mobilized from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

LIC was formed by merging and nationalizing 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore.

Its product portfolio comprises 32 individual plans (16 participating and 16 non-participating) and seven individual optional rider benefits. The insurer's group product portfolio comprises 11 group products.

As of December 2021, LIC had a market share of 61.6 percent in terms of premiums or gross written premium, 61.4 percent in terms of new business premium, 71.8 percent in terms of the number of individual policies issued, and 88.8 percent in terms of the number of group policies issued.

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

"We believe LIC's listing will broaden the investable universe and further raise the sector's relevance in investors' portfolios," said global brokerage Jefferies.

"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 omnichannel 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 Rs 949, 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.