LIC IPO gets 2.95 times subscription; foreign investors' response muted

Life Insurance Corp's mega public offering -- India's largest to date -- on Monday closed with nearly 3 times subscription, predominately lapped up by domestic retail and institutional buyers but foreign investor participation remained muted.

The government, which raised Rs 20,500 crore from sale of 3.5 per cent of its stake in the country's largest insurer, however shrugged of the muted participation of foreign investors, saying the issue was an example of 'Atmanirbhar Bharat' (self-reliant India) and the issue saw interest from a cross section of investors.

Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey termed the response to the IPO as "tremendous", adding that the issue saw good participation from all categories of investors.

"Like all other investors, foreign institutional investors also take their own call.

“You can project this issue as an example of Atmanirbhar Bharat...this big issue has seen interest from people across different segments.

"It shows that capacity of Indian capital market has increased substantially and it also shows that we can run our own capital market without depending on foreign investors...It is a fact that this issue has been predominately lifted by by domestic institutions," he said.

The foreign investors are also welcome and some of them did participate in the issue, he asserted.

The anchor portion of the IPO was more than 70 per cent subscribed by domestic institutions, including mutual funds insurance companies.

Applicants would be allocated LIC shares on May 12, while the insurance giant will be listed on the bourses on May 17.

Overall, the LIC IPO was subscribed 2.95 times at the end of the six-day bidding period which ended on Monday.

Against 16,20,78,067 shares on offer, 47,83,25,760 bids were received, according to data posted on stock exchanges at 7 pm.

The Qualified Institutional Buyers (QIBs) category was subscribed 2.83 times.

As many as 11.20 crore bids were received for the 3.95 crore shares earmarked for the segment.

Within the QIB segment, domestic financial institutions and mutual funds bid for around 5.78 crore shares, while that by foreign institutional investors was less than half at 2.41 crore shares.

With regard to non-institutional investors (NIIs), a total of 8,61,93,060 bids were received for 2,96,48,427 shares reserved for the category, reflecting a subscription of 2.91 times.

Retail individual investors bid for 13.77 crore shares as against 6.9 crore shares on offer for the segment, translating into an over-subscription of 1.99 times.

The policyholders' portion was subscribed a little over 6 times, while that for employees was subscribed 4.4 times.

Expressing satisfaction over the successful completion of the IPO, Pandey said such a large public offer will deepen the capital market and provide a good investment opportunity for small investors.

LIC had fixed the price band at Rs 902-949 per equity share for the issue.

The offer includes a reservation for eligible employees and policyholders.

The retail investors and eligible employees will get a discount of Rs 45 per equity share, while policyholders will get a discount of Rs 60 per share.

The government has diluted 3.5 per cent stake in the insurance behemoth through the Offer for Sale (OFS).

LIC reduced its IPO size to 3.5 per cent from 5 per cent decided earlier due to the prevailing choppy market conditions.

Even after the reduced size of about Rs 20,557 crore, LIC IPO is the biggest initial public offering ever in the country.

So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

LIC was formed by merging and nationalising 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore.

Its product portfolio comprises 32 individual plans (16 participating and 16 non-participating) and seven individual optional rider benefits.

The insurer's group product portfolio comprises 11 group products.

As of December 2021, LIC had a market share of 61.6 per cent in terms of premiums or gross written premium, 61.4 per cent in terms of new business premium, 71.8 per cent in terms of the number of individual policies issued and 88.8 per cent in terms of the number of group policies.