LIC’s IPO, India’s largest at ₹21k crore, subscribed 3 times

MUMBAI: The Rs 21,000-crore initial public offering (IPO) for life insurance behemoth LIC received a huge response from domestic institutions and was oversubscribed nearly three times by the time it closed on Monday. LIC’s policyholders, its employees, retail investors, high net worth investors (HNIs) and domestic financial institutions contributed handsomely to the offer. On the other hand, foreign funds – despite initial talk about strong demand from this influential group of investors – turned out to be mostly fence sitters, according to the final subscription figures.
In the post-issue press conference, Tuhin Kanta Pandey, secretary of the government’s divestment arm Dipam that was responsible for taking LIC public, described the offering as an ‘Atmanirbhar’ issue as it was the domestic investors, especially the Indian financial institutions, that saw it through. The issue had opened on May 4 and, unlike other offers in the past, investors were able to bid in the IPO on all the intervening days – including Saturday and Sunday – as the government had made special arrangements to smoothen the usual last-day rush seen in most high-profile offers.
According to data on the BSE, the portion reserved for LIC’s policyholders was subscribed 6.1 times, for eligible employees it was 4.4 times, for retail investors nearly 2 times, for HNIs 2.9 times and for the institutional buyers 2.8 times. The IPO received bids for nearly 48 crore shares against 16.2 crore on offer. A day before the IPO opened for all investors, the government had placed LIC shares worth about Rs 5,600 crore with a clutch of domestic and foreign investors. This was the first divestment offer in the history of the Indian capital market that had anchor investors.
Through this IPO, the biggest in India, the government divested 3.5% of its equity in the life insurance major. According to the pricing policy of the offer, LIC’s policyholders will get a Rs 60-per-share discount on the final price, while retail investors get Rs 45.
Interestingly, as the mega IPO drew to a close on Monday, the grey market premium (GMP) in the unofficial market for shares evaporated. At the start of the IPO on May 4, the GMP was at Rs 60-65 per share, which on the second day hit a high of Rs 80. By Monday afternoon, however, the GMP was at a low of Rs 5 and, by evening, it had vanished. GMP for any IPO is an indicator of the premium the shares could command at listing. LIC is expected to be listed on May 17.