LIC-IPO Subscription Status: Subscribed to LIC-IPO almost three times; Government raises Rs 21,000 cr

NEW DELHI: Life Insurance Corporation’s IPO, the country’s largest public offering, drew 2.95 times on the closing day of Monday’s offering period, helping the government to mobilize about Rs 21,000 crore. Shares offered against 16.20.78.067 received 47.83.25.760 bids, as published on the exchanges at 7 p.m.

Shares will be allocated to bidders in LIC’s IPO on May 12 and the insurance giant will be listed on the stock exchanges on May 17, said DIPAM secretary Tuhin Kanta Pandey.

The Qualified Institutional Buyers (QIBs) category was drawn 2.83 times. Up to 11.20 billion bids were received for the 3.95 billion shares earmarked for the segment.

A total of 8,61,93,060 bids were received from non-institutional investors (NIIs) for 2,96,48,427 shares reserved for this category, a multiple subscription of 2.91.

Private retail investors bid for 13.77 billion shares versus 6.9 billion shares offered for the segment, resulting in an oversubscription of 1.99 times.

The share of policyholders was subscribed a little more than 6 times, the share of employees 4.4 times.

LIC had set the price range for the issue at Rs 902-949 per share. The offer includes a reservation for eligible employees and policyholders. Retail investors and eligible employees receive a rebate of Rs 45 per share while policyholders receive a rebate of Rs 60 per share.

The government has diluted 3.5 percent stake in the insurance giant through the Offer to Sell (OFS).

LIC reduced its IPO size to 3.5 percent from 5 percent previously decided due to the prevailing unsettled market conditions. Even after the reduced size of around Rs 20,557 crore, LIC’s IPO is the largest-ever IPO in the country.

So far the amount mobilized from Paytm’s 2021 IPO has been the largest ever at Rs 18,300 crore, followed by Coal India (2010) at almost Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

LIC was formed by the merger and nationalization of 245 private life insurance companies on 1st September 1956 with an initial capital of Rs 5 crore.

The product portfolio includes 32 individual plans (16 participating and 16 non-participating) and seven individual optional driver 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 premiums written, 61.4 percent in terms of new business premiums, 71.8 percent in terms of number of individual policies issued and 88.8 percent in terms of number of the issued group policies.

The majority of brokers are optimistic about 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 Jefferies.

“It will also help investors better track 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.