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Policyholder, staff bids push LIC IPO past full subscription

LIC has fixed the price band at Rs 902-949 per equity share for the issue. The offer includes a reservation for eligible employees and policyholders.

LIC IPO Live, LIC IPO open UpdatesLIC IPO Open Live: LIC (Life Insurance Corporation of India) logo is seen displayed in this illustration taken, February 15, 2022. (REUTERS/Illustration/File Photo)

Aided by strong support from retail investors, employees and policyholders, the mega initial public offering (IPO) of Life Insurance Corporation (LIC) was fully sold out on Thursday, the second day of the offer period. The IPO was subscribed 103 per cent, with investors putting in bids for 16.68 crore shares as against the public offer of 16.20 crore shares.

LIC policyholders’ quota was oversubscribed 3.11 times (311 per cent) of the portion reserved for them and the portion reserved for employees was subscribed 222 per cent. The retail investors portion was subscribed 93 per cent, as per data released by stock exchanges. Retail investors and policyholders have together invested over Rs 10,000 crore in the IPO.

While 2.21 crore shares were allotted for policyholders, there were bids for 6.89 crore shares. Employees bid for 35.03 lakh shares as against their quota of 18.51 lakh shares. The second day’s response from investors for the IPO was strong despite the Reserve Bank decision to hike the repo rate and cash reserve ratio.

Non-institutional investors subscribed 47 per cent of their portion while qualified institutional buyers (QIBs) bought 40 per cent of the allotted quota of 3.95 crore shares. Almost all of the bids — 1.59 crore shares — in the QIB quota were put by banks, domestic institutions, insurance companies and mutual funds. “QIBs normally put in their bids on the last day of the IPO. Retail investor quota is expected to be fully subscribed before the issue closes,” investment bankers said.

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Retail investors have invested over Rs 5,700 crore in the IPO so far and policyholders Rs 5,956 crore. However, foreign portfolio investors (FPIs) are yet to apply for shares in the QIB quota. FPIs had bid for only 225 shares as on Thursday. On the first day, overall, there were bids for 10.86 crore shares against the total IPO size of 16.20 crore shares, exchanges said. The issue will close on May 9.

Girirajan Murugan, CEO, FundsIndia, said, “The valuation of the IPO is attractive to keep the issue stable. The EV (embeded value) seems to be in favour of LIC compared to the existing listing players on the insurance space.”

LIC priced the IPO in the range of Rs 902-949 per share and offered a discount of Rs 60 for policyholders and Rs 45 for retail investors and employees. The IPO size was cut from Rs 65,000 crore to Rs 21,000 crore as the Russian invasion of Ukraine and sustained selling by foreign investors sent the stock markets into a tailspin.

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Domestic mutual funds invested Rs 4,002.27 crore, accounting for 71.12 per cent of the total anchor book portion of the IPO. SBI Mutual Fund invested Rs 1,006.89 crore, becoming the largest investor in the anchor book quota. LIC mobilised Rs 5,627 crore from anchor investors on Monday. Four equity schemes of SBI MF invested the amount, with SBI Equity Hybrid Fund alone putting Rs 518.99 crore, according to data available from exchanges.

Seven schemes of ICICI Prudential Mutual Fund invested Rs 725 crore in the IPO. HDFC Mutual Fund was allocated shares worth Rs 525 crore. Aditya Birla Sun Life MF, Axis Mutual Fund, Kotak MF, L&T MF and Nippon India MF, among others, also invested in the anchor portion.

Among foreign funds, BNP Investments LLC was allocated shares worth Rs 449.99 crore. Government Pension Fund Global of Norway invested Rs 224.99 crore. The Government of Singapore invested Rs 151.67 crore and the Monetary Authority of Singapore put in Rs 38.32 crore.

First published on: 05-05-2022 at 07:01:27 pm
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