The government is looking to divest its 3.5 per cent stake in the Life Insurance Corporation (LIC) by selling 22.13 crore shares through this IPO.

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Money IPO Wednesday, May 04, 2022 - 16:25

Life Insurance Corporation’s Rs 21,000 crore initial public offering (IPO) opened for subscription on May 4. The price band for the LIC IPO has been fixed at Rs 902-949 per share. Through this IPO, the government is looking to divest its 3.5 per cent stake in the insurer by selling 22.13 crore shares. Here are 5 things to know: 

> On the first day of bidding, the LIC IPO, which is the biggest initial public offering (IPO) in the history of Indian markets, is subscribed 54% at the time of writing. The LIC policyholders have subscribed 1.69 times the portion reserved for them, employee reserved portion has been subscribed 91%, while retail investors portion has been subscribed 52%. Non Institutional investors have subscribed 22% of their portion and qualified institutional buyers bought 16% of allotted quota of 3.95 crore shares so far. 

> Investors can bid for a minimum of 15 shares (one lot) for Rs 14,235 at the upper end of the issue price. LIC policyholders are entitled to a discount of Rs 60 per equity share, while retail investors and employees will get a discount of Rs 45 on each share.

> The Rs 21,000 crore LIC IPO represents the highest ever valuation for an IPO in the Indian market. Prior to this, Paytm IPO saw the highest fundraise last year at Rs 18,300 crore and Coal India in 2010 at Rs 15,200 crore. 

> LIC’s initial public offering will take subscriptions on Saturday as well, which is considered unusual and the move is aimed at attracting investors including retail buyers. “This is a bit unusual for a share sale. However, this exception has been given to LIC IPO considering its sheer size and humongous interest from retail investors,” said Kranthi Bathini, chief market strategist at WealthMills Securities in Mumbai.”

> On a standalone basis, LIC is the largest assets manager in India with an AUM (Assets under Management) of Rs 40.1 trillion. This is more than 3.2 times the total AUM of all private life insurers in India and 17% of India’s estimated GDP for FY22. According to Reliance Securities, LIC’s investments in listed equity represent around 4% of the total market capitalisation of the National Stock Exchange.

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