The public issue of Life Insurance Corporation of India (LIC) has garnered good demand from investors as it received bids worth Rs 43,933.5 crore till May 9, the final day of bidding, which was more than double the issue size. The issue was opened on May 4.
The offer was subscribed 2.95 times as investors put in bids for 47.82 crore equity shares against IPO size of 16.20 crore shares, as per the subscription data available on exchanges.
The participation by policyholders remained quite strong as they bid 6.12 times the allotted quota and the value of shares subscribed for was Rs 12,034 crore.
“Participation from tier 2-3 cities is high for LIC IPO, we can attribute this to the deeper agent and policy holder penetration of LIC. We have got a good amount of applications from the newly formed Union territories as well,” said Girirajan Murugan, CEO at FundsIndia.
Retail investors have invested Rs 12,456 crore in the IPO, the highest amount among investors during May 4-9. Their reserved portion was subscribed 1.99 times and that of employees 4.4 times.
The government offered LIC shares to retail investors and employees at a discount of Rs 45 per share to the final issue price, while the discount for policyholders was Rs 60 per share.
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“We are sure this will pave the way for larger retail participation in the secondary markets as well as the accounts opened for applying to LIC IPO will be used for larger investments in the equity markets,” said Murugan.
Qualified institutional buyers have bought shares 2.83 times the allotted quota and the portion set aside for non-institutional investors was subscribed 2.91 times.
In terms of value, QIBs poured in Rs 10,635 crore and NII Rs 8,180 crore in LIC IPO.
The government intended to raise Rs 21,000 crore through LIC IPO by selling 3.5 percent stake or 22.13 crore equity shares to investors, with a price band of Rs 902-949 per share. Before the beginning of public issue subscription, LIC raised Rs 5,600 crore from anchor investors on May 2.
All the money will go to the selling shareholder, i.e. Government of India. Hence, the company will not receive any money from the public issue.
The country’s largest life insurance company will finalise the share allotment by May 12 and will credit refunds in the bank accounts of unsuccessful investors by May 13. Eligible investors will get shares in their demat accounts by May 16.
LIC will make its debut on the BSE and NSE on May 17 as per the schedule published in the prospectus.
The trading premium of LIC in the unlisted market (grey market) has further dropped to Rs 40, which translated into a trading price of Rs 989, a 4 percent higher than expected final issue price of Rs 949 per share, as per IPO Watch.
The grey market premium was around 10 percent before launching LIC IPO for subscription.
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