LIC IPO fully subscribed on Day 2; Policyholders 3 times, employees 2.14 times, retail 0.91 times
Insurer Life Insurance Corporation of India’s (LIC) initial public offering (IPO) has been fully subscribed on Day 2. The policyholders’ and the employees’ quotas have also been oversubscribed at 3 times and 2.14 times, respectively. The retail portion has received 0.91 times bids so far. Similarly, Qualified Institutional and Non-Institutional Investors have received 40 per cent and 46 per cent subscriptions, respectively, on the second day of the IPO. The price band has been fixed at Rs 902-949 for the public issue, which offers a special discount of Rs 45 per share to retail investors and employees of LIC and Rs 60 to policyholders.
The government is disinvesting its 3.5 per cent stake through the IPO to collect approximately Rs 21,000 crore from the markets. ┬аIt is the biggest-ever IPO with Paytm second in the league with an IPO size of Rs 18,300 crore, followed by Coal India Ltd. (CIL) at around Rs 15,500 crore and Reliance Power in 2008 at Rs 11,700 crore. ┬а
FundsIndia gave an attractive valuation to the IPO stating, “There will be a lot of first-time investors, especially from the tier 2 and 3 markets to participate in this IPO. This IPO is expected to be a milestone event in the capital markets not just with the issue size but also with the number of Demat accounts that will be opened during this period. What the investors would look for before investing in the LIC IPO would be penetration of LIC in markets untouched by the private insurance players, being a first mover in the insurance play in India. LIC has this upper hand and it continues to lead the space with its far reach of the network both through agents and branches. The price at which LIC is coming with an IPO seems attractive on the valuation front.”
The oldest life insurance company, which was formed in 1956, has a network of 29 crore policyholders, 2 lakh plus employees and 13 lakh agents covering. The insurer manages assets under management (AUM) of 39 lakh crore, which is more than the AUM managed by the whole mutual fund industry.
At an estimated market cap of Rs 6 lakh crore, the issue is priced at a Market Cap to Embedded Value of 1.1x, which is at a discount compared to its listed India well as global peers which many experts believe has given global and domestic investors a fair chance to grab a bite compared to earlier pricing and valuation. LIC’s embedded value is Rs 5.4 lakh crores as of September 30, 2021, according to actuarial firm Milliman Advisors.
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