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.
The Indian primary markets’ largest IPO to date, with a total value of Rs 20,557 crore, is open for subscription until May 9th. Retail bidders can even bid on the issue on Sunday, an unusual move aimed at attracting investors.
According to data from BSE, on Sunday, March 8, investors
Of the five categories, only the Qualified Institutional Buyers (QIBs) quota was awaiting full subscription, with investors bidding for just 67 percent of the allotment.
Quotas for retailers, employees, policyholders and HNI investors have been fully subscribed. The policyholder portion was subscribed 4.8 times, followed by 3.6 subscriptions for the employee award.
The offering is entirely an offer to sell about 22.13 billion shares of the Indian government, which owns 100 percent of the shares in the insurer but will sell only 3.5 percent of the company’s shares.
The company will sell its shares in the price range of Rs 902-949 but has offered a rebate of Rs 60 per share to its policyholders who will bid on the issue. Eligible employees and retail bidders will receive a rebate of Rs 45 per share .
The company has reserved 50 percent of the net issue for qualified institutional bidders (QIB), with non-institutional bidders (NIIs) receiving 15 percent of the issue. The remaining 35 percent share was allocated to retail bidders.
Life Insurance Corporation of India is valued at Rs 6 lakh crore which is approximately 1.12 times its Embedded Value (EV) of Rs 5.4 lakh crore. It’s pretty reasonable for its publicly traded peers, brokers said.
LIC’s assets under management increased by about 10 per cent to Rs.37,46,404.47 at the end of FY2021 from Rs.34,14,174.57 in the previous year. The company’s net profit increased to Rs.2,974.14 million from Rs.2,710.48 crore.
For the period ended 31 December 2021, LIC had total assets under management of Rs 40,90,786.78 crore and reported net profit of Rs 1,715.31 crore.
The majority of brokers are bullish on LIC’s IPO and have suggested subscribing to it. However, some have raised concerns about declining market share and the backlog of future share sales by the government.
“We believe the listing of LIC will broaden the investment universe and further increase the sector’s relevance in investors’ portfolios,” said global brokerage Jeferries.
“It will also help investors better follow sector dynamics as LIC disclosures become more frequent. LIC recalibrated its par and non-par products prior to listing,” it added.
LIC is likely to strengthen its omnichannel distribution network for individual products and increase its productivity, Ashika Stock Broking said with a “subscribe” rating on the matter.
“There is clearly room for every player in the industry to grow without embracing cannibalism. In the upper price range of Rs.949, the issue is valued at a significant discount to private sector valuations,” he added.
LIC operates through 2,048 branch offices, 113 departmental offices and 1,554 satellite offices. It operates worldwide including in countries such as Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, United Arab Emirates, Bahrain, Qatar, Kuwait and the United Kingdom.
LIC has raised over Rs 5,627 crore from the anchor investors by allocating them 5.92 crore shares at Rs 949 per share, the insurer said in a filing with the exchanges. Of these, 4.2 million shares were allocated to 15 domestic investment funds.
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