MUMBAI: The LIC issue generated robust investor demand amid a sharp fall in the market, with 67% of shares on offer being subscribed on the opening day itself. Policyholders and employee portions were oversubscribed.
Of a total 16.21 crore shares offered, 10.85 crore shares were bid for. Policyholders bid for 4.39 crore shares against the 2.21 crore reserved for them, resulting in 1.99 times subscription. They were followed by employees who bid for 18.47 crore shares against 15.81 crore shares on offer, implying 1.17 times subscription.
Retail investor portion was subscribed by 60%. Against 6.92 crore shares on offer, 4.15 crore were bid for by them. Qualified institutional buyer portion was subscribed 0.33 times and non -institutional investors by 0.27 times on day 1 of the issue. Nirmal Jain, founder and chairman of IIFL Group, believes the “attractive” valuation is the “big draw” for investors. He recommends retail investors should participate in the IPO rather than buying from the secondary market, as LIC remains a “long term investment story.”
“The opening day subscription amid the steep market fall clearly shows that applicants are looking at the long-term prospects rather than bidding for listing gains only,” said Rajesh Palviya, Vice President (Research) Axis Securities .
The valuation based on the upper price band of Rs 949 apiece works out to Rs 6 lakh crore. The draw for policyholders is Rs 60 per share discount they can avail of and for employees a Rs 45 per share discount. To subscribe under the policyholder category, PAN Card of the holder should be linked to the policy by February 28 and the demat account details should match those of PAN.
A unique feature of the IPO at Rs 21,008 crore is that if an investor belongs to the retail category and is an employee of LIC and a policyholder, she can bid under all the three categories for an aggregate Rs 6 lakh against the cap of Rs 2 lakh for a retail individual investor.
LIC Day 1 subscription