LIC public offer fully subscribed on day 2
MUMBAI: LIC’s public offer, the country’s biggest-ever IPO, was fully subscribed on the second day of bidding on Thursday.
Against 16,20,78,067 shares on offer, 16,25,35,125 bids were received, making the public issue fully subscribed, as per data on stock exchanges as of 6.24 pm.
Of the total, the policyholders’ portion was subscribed a little over three times, while that for employees was subscribed 2.14 times.
Qualified Institutional Buyer (QIB) and Non-Institutional Investor ( NII) portion has received a tepid response so far. Non-institutional investors’ segment was subscribed 46%, while QIBs’ portion was slightly lower at 40%.
Retail individual investors picked up nearly 91% of the 6.9 crore shares set aside for this segment.
The initial public offering (IPO) will close on May 9.
The government aims to generate about ₹21,000 crore by diluting its 3.5% stake in the insurance behemoth.
LIC has fixed the price band at ₹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 ₹45 per equity share, while policyholders will get a discount of ₹60 per share.
The share sale is through an offer-for-sale (OFS) of up to 221.3 million equity shares. The shares are likely to be listed on May 17.
Demand for LIC’s IPO continued while the wider stock market ended flat a day after the Reserve Bank of India unexpectedly raised interest rates ahead of a 50 basis points hike by the U.S. Federal Reserve.
“The pricing and the discounts make this offering attractive despite there being a chance of near-term market volatility,” said Narendra Solanki, head of fundamental research at Anand Rathi.
Moody’s Investors Service said LIC’s IPO was credit-positive for India’s life insurance industry as the listing will drive transparency and competitiveness in a sector dominated by the staterun insurer, which has more than 280 million policies.
However, the rating agency also said the benefits from the IPO will be limited until the government sells a substantial stake in the company, that has nearly 65% market share.
Ravi Singh, Head of Research, Share India, said in the grey market LIC IPO is trading at around ₹1200-1250 which is around 25 to 30% higher than the issue price. This is giving confidence to the retail investors to invest in LIC IPO.