LIC investors may have to wait for 1 yr for follow-on offer

THE LIC IPO, INDIA’S BIGGEST INITIAL PUBLIC OFFERING, WAS OVERSUBSCRIBED 2.95 TIMES ON CLOSING DAY

NEW DELHI: Investors may have to wait for at least a year for a follow-on public offer of stateowned Life Insurance Corporation of India, Department of Investment and Public Asset Management secretary Tuhin Kanta Pandey said on Monday after the country’s biggest initial public offering was oversubscribed 2.95 times on closing day.

Although some foreign institutional investors have taken interest i n the IPO despite adverse global geopolitical developments and its impact on economies, LIC’S offering was predominantly taken up by domestic investors, he told reporters after the six-day bidding came to an end on Monday.

Shares will be allotted to successful investors on May 12. They will be listed on May 17. The IPO is expected to fetch ₹20,500 crore for the government’s 3.5% stake at the higher end of the price band after discounts to policyholders, employees and retail investors.

“The issue has been a tremendous success,” Pandey said, adding that overwhelming interest by domestic institutional and retail investors could also be seen in the light of India’s policy focus of Atmanirbhar Bharat (self-reliant India).

LICS shares were oversubscribed nearly twofold by retail investors, according to the stock exchanges. They had been offered about 69.2 million shares at a discount of ₹45 per share.

“Indian retail investors have played a key role, especially during the last two years,” finance minister Nirmala Sitharaman had said in Mumbai on Saturday. “They have shown the world what they can do by standing up and becoming shock absorbers, unlike FPIS (foreign portfolio investors).”

Sitharaman was addressing the silver jubilee celebrations of the National Securities Depository Ltd (NSDL).

“From an average of 4 lakh new demat accounts opened every month in 2019-20, it tripled to 12 lakh per month in 2020-21 and has further increased to around 26 lakh per month in 2021-22,” she said.

About 478 million bids were received for around 162 million shares of LIC on offer at 7pm on Monday, according to the stock exchanges. Despite adverse global market conditions, LIC took the risk of entering in the market, but reduced its IPO size to 3.5% from its earlier plan to dilute 5% of the government’s holding through the IPO.

LIC’S price band was fixed between ₹902 and ₹949 per equity share. The offer included reservation for eligible policyholders and employees. A discount of ₹45 was offered to eligible retail investors and employees, while the discount for the policyholders was ₹60 per share.

The stock markets were down on Monday due to various reasons, including investors pulling out funds to invest in the LIC IPO, experts said.