BackLIC share sale retail portion oversubscribed
The LIC share sale is on till 9 May, longer than other IPOs, which remain open for three days. Subscriptions will also be open on Sat. LIC will list on the stock exchanges on 17 MayThe price band for the share sale has been fixed at ₹902-949 apiece
PremiumMUMBAI : The retail portion of Life Insurance Corp. of India’s (LIC’s) initial public offering (IPO) was oversubscribed by 1.23 times on the third day of the share sale, as retail investors continued to prop up demand on Friday, bidding for shares worth over ₹7,000 crore.
The retail portion of the IPO, comprising 69.1 million shares, is the biggest retail book ever for an Indian IPO. Retail investors bid for 83.5 million shares, according to stock exchange data. Overall, the IPO was subscribed 1.38 times.
To be sure, while the IPO has been subscribed by over 100%, led by policy holder and retail categories, it needs to achieve a minimum subscription of 90% by institutional investors for a successful close. The portion of the IPO reserved for institutional investors was subscribed 56% on the third day.
The LIC IPO closes on 9 May, having a longer bidding window of six days compared to other IPOs which are open for three days. Subscription will be open on Saturday, LIC will be listed on the exchanges on 17 May.
The price band for the share sale has been fixed at ₹902-949 apiece. Retail investors and LIC employees have been offered a discount of ₹45 per share, while policyholders enjoy a discount of ₹60 per share. The portion reserved for policyholders was oversubscribed by 4.01 times, while that of high net-worth individuals was subscribed 71%.
Axis Securities analysts said in a report that LIC will trade at attractive valuations, considering that at the upper end of the price band, the stock will trade at around 1.1x market cap-EV (H1 FY22 embedded value) as against the industry average of around 3x.
“Given the under-penetration of life insurance in India, the higher protection gap, and the improving financialization of savings, we expect LIC to maintain its market leadership position adequately supported by good business traction. Furthermore, it intends to increase its share of high-margin non-par products to improve its margins, which will augur well for LIC in the long term. Additionally, the company’s NBP/APE (new business premium/ annual premium equivalent) growth has witnessed a strong rebound, enabling it to gain market share in Q4FY22," the report added.
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