The Initial Public Offering (IPO) of the insurance behemoth opened for subscription yesterday and it will remain open for subscription till 9th May 2022.
As potential bidders are busy scanning financials of the Life Insurance Corporation (LIC) of India. Analysts have advised LIC policyholders and employee category applicants to apply for the maximum possible lots that they can afford.
They advised the reserved category subscribers to prefer their policyholder and employees category ahead of the retail category because allotment of shares in a retail category will be done through the draw of lots whereas in the reserved category. It will be done on a proportionate basis.
They said that chances of getting shares through allotment are higher in the reserved category in comparison to retail category applications.
After a reservation for employees and policyholders, the remaining shares will be allocated in a ratio of 50% to qualified institutional buyers, 35% to retail investors, and 15% to non-institutional investors.
LIC shares were trading in the “grey” market at a premium of 95 rupees, around 1,044 rupees apiece.
To drum up demand from retail investors, in addition to heavy advertising in local newspapers, some 1.2 million field agents were dispatched across India to woo many of LIC’s more than 250 million policyholders to buy the shares.
Policyholders were also flooded with text messages earlier this year recommending they open an electronic stock holding account early so they can take part in the IPO.
IPO Subscribed
LIC (Life Insurance Corporation) IPO has been subscribed 0.84 times so far on the second day of sale with policyholders of LIC and employees of the company oversubscribing their quota already. The largest public issue, worth Rs 21,000 crore, has witnessed a strong response from investors so far.
The issue was subscribed 0.67 times on day one. The government of India is looking to trim its stake in the insurance behemoth, offering a 3.5% stake in the company at a fixed price band of Rs 902-949 per share.
The demand for LIC’s IPO came even as the stock market (.NSEI) fell 2.3% after the Reserve Bank of India unexpectedly hiked interest rates to tame inflation.
The subscription, set to close on May 9, is offering a discount to employees and retail investors of 45 rupees per share. LIC policyholders will be offered a discount of 60 rupees per share.
Qualified Institutional Buyers (QIB) have subscribed to their portion of the issue 0.34 times by 1 PM on day two of the issue. QIBs have been offered 3,95,31,236 equity shares of which 1,32,55,770 equity shares have been bid for.
The majority of the bids have been placed by domestic institutional investors. Non-institutional investors (NII) have bid for 0.34 times their portion, with investors bidding for 99,66,165 equity shares out of the 2,96,48,427 on offer.
Retail investors have bid for 0.78 times their quota of LIC shares. Bids have been received for 5,38,43,850 equity shares out of 6,91,79,663 equity shares on offer.
Meanwhile, policyholders of LIC have subscribed their portion 2.57 times so far and employees of the firm have bid for 1.75 times the portion reserved for them.
The government had initially wanted to list LIC in the financial year that ended March 31 but chose to delay the sale after Russia invaded Ukraine and the U.S. Federal Reserve’s interest rate hikes triggered a market rout.
The 66-year-old company dominates India’s insurance sector, with more than 280 million policies. It was the fifth-biggest global insurer in terms of insurance premium collection in 2020, the latest year for which statistics are available.
