Life Insurance Corporation (LIC).
Highlight
- Government aims to raise Rs 21,000 crore by selling 3.5 per cent stake in insurance giant
- The portion reserved for policyholders was subscribed 1.9 times
- LIC’s IPO, open to retail and institutional investors, to close on May 9
LIC’s public offering, the country’s biggest IPO ever, saw a share of policyholders oversubscribed on the very first day on Wednesday, though the total subscription stood at 67 per cent.
The government aims to raise around Rs 21,000 crore by selling 3.5 per cent stake in the insurance giant.
The initial public offering (IPO) of LIC, open to retail and institutional investors, is scheduled to close on May 9. The issue period also includes bidding on Saturday, May 7.
As per data available on BSE, the portion reserved for policyholders was subscribed 1.9 times, while that for employees was fully subscribed during the first day itself.
LIC has fixed a price band of Rs 902-949 per equity share for the issue. The offer includes reservation for eligible employees and policyholders.
Retail investors and eligible employees will get a discount of Rs 45 per equity share, while policyholders will get a discount of Rs 60.
However, demand from Qualified Institutional Buyers (QIBs) and non-institutional investors remained muted. The share of non-institutional investors was subscribed at 27 per cent, while the share of QIBs was oversubscribed at 33 per cent.
The retail individual investor category bought nearly 60 per cent of the 69 million shares set aside for this segment.
As per data available on the exchanges at 7 pm, bids were received for 10,86,45,360 shares against 16,20,78,067 equity shares (excluding shares offered to anchor investors) in the offer.
The sale of shares is done through an offer-for-sale (OFS) of 22.13 crore equity shares. The shares are likely to be listed on May 17.
LIC has already withdrawn over Rs 5,627 crore from anchor investors, mainly led by domestic institutions.
Anchor Investors (AI)’s share (5,92,96,853 equity shares) was subscribed at Rs 949 per equity share.
LIC reduced the size of its IPO to 3.5 per cent from the earlier fixed 5 per cent due to prevailing market conditions.
LIC’s IPO is going to be the largest ever initial public offering in the country, despite the small size of around Rs 20,557 crore.
So far, the amount raised from Paytm’s IPO in 2021 was the largest at Rs 18,300 crore, followed by Coal India (2010) at around Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
LIC was formed on September 1, 1956 by merging and nationalizing 245 private life insurance companies with an initial capital of Rs 5 crore.
Its product portfolio includes 32 individual products (16 participating and 16 non-participating products) and seven individual optional rider benefits. The group product portfolio of the insurer comprises 11 products of the group.
As of December 2021, LIC had a market share of 61.6 per cent in terms of premium or GWP, 61.4 per cent in terms of new business premiums, 71.8 per cent in terms of number of individual policies issued and 88.8 per cent. Number of group policies issued.
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