MUMBAI: The LIC initial public offer (IPO) was fully subscribed on Day 2, underscoring strong interest for the country’s largest public issue at Rs 21,000 crore. Against 16.21 crore shares on offer, 16.69 crore shares received bid for, implying a subscription of 1.03 times.
Policyholders’ portion was subscribed 3.11 times, followed by employee quota at 2.22 times, while retail investors’ portion was subscribed by 0.93 times. Retail and employees portions will be allocated at a Rs 45 discount, while policyholders will get a Rs 60 per share discount.
Nilesh Shah, MD, Kotak AMC, termed the response to the issue as “pretty impressive,” amid the high market volatility, led by FII selling. “The healthy subscription shows immense interest in the offering irrespective of the market trend,” said Siddarth Bhamre, research head at Religare Broking. “The chief draw is the valuation which at 1.1 times price to embedded ratio is much cheaper than the life industry average of 3 times.”
When the issue opened on May 4, the total subscription was 67%. The grey market premium, which was Rs 55 -60 per share on May 4, rose to Rs 65-70 on Day 2, based on the healthy subscription figures, said to Sunil Pachisia, director - institutional sales, Pratibhuti Vinihit.
“LIC intends to increase its share of high-margin non-par products to improve its margins which will augur well for the company over the long term,” said Axis Securities in an IPO note. “Additionally, the company’s NBP/APE (new business premium to annualised premium equivalent) growth has witnessed a strong rebound, enabling it to gain market share in Q4FY22.”
Earlier, LIC raised Rs 5,627 crore from 123 anchor investors at the upper price band of Rs 949 apiece. Of the 5.93 crore shares allotted to the anchor investors, 4.21 crore shares or 71.12% was allocated to 15 domestic mutual funds through 99 schemes.
