Life Insurance Corporation (LIC), India’s largest insurer, is set to launch on the exchange on Tuesday. The insurer’s offer, at Rs 21,000 crore, is the largest in the country even after cutting the issue size.
The issue has been subscribed almost three (2.95) times despite strong sales in the market and global volatility. The total revenue from the IPO constitutes about one-third of the government’s investment target of Rs 65,000 crore for the current financial year.
B Gopkumar, MD and CEO, Axis Securities, said earlier this month: Slightly higher discounts offered to eligible policyholders were one of the reasons for subscribing 6 times to their quota. We have seen this IPO act as a stimulus to drive retail participation in the equity market. ”
Analysts believe that the list of insurers will further increase the relevance of the industry in the portfolio of investors. “LIC’s listing will expand the investable universe. It will help investors better track the dynamics of the sector as LIC releases are becoming more frequent,” Jefferies’ analysts wrote in a note earlier this year.
LIC will play the story of the growth of the low-penetration insurance industry. The stock movement will depend on the government’s plan to make it even thinner. Hemang Jani, Head – Equity Strategy, B&D, Motilal Oswal, said, “Investors applying from a long-term perspective should keep in mind that its potential depends on the company’s performance in a competitive market and we look forward to its performance.” The next few quarters before a scene is formed. “
The list comes at a time when markets around the world are going through a correction between rising interest rates and concerns over geopolitical tensions.
However, despite low demand from institutional investors, retail investors (policyholders, employees and retailers) have faith in LIC’s proposal.
Quota shares reserved for policyholders were subscribed 6.12 times during the sale, which attracted bids worth Rs 12,034 crore. Retail investors bid for 137 million shares between May 4-9, up from 69 million offered. The segregated portion for employees was subscribed 4.4 times. Overall, the issue attracted bids worth Rs 43,933 crore against the issue size of Rs 20,557 crore.
The government has said there will be no follow-on public offer, at least for next year. The insurer will list shares worth Rs 6 lakh crore. The promoter (Government of India) shareholding stands at 96.5% after reducing its stake in the public offering by 3.5%. However, this is less than the previously planned 5% liquefaction, which could fetch the government around Rs 60,000 crore.