LIC IPO booked 67% on Day 1; will it fully subscribe today?

The initial public offering (IPO) of insurance major Life Insurance Corporation (LIC) of India received an overwhelming response from investors on day one of bidding. The offer, which is touted to be the country’s largest-ever IPO, was booked 67% on May 4, while quota reserved for policyholders and employees were fully subscribed, when bidding closed for the first day. If it continues at the current rate, the LIC IPO is expected to be oversubscribed on the second day of the bidding. The offer, which carries a price band of ₹902-949 apiece, is set to close on May 9. The share allotment for LIC IPO is expected to be done on May 12, while shares are likely to list on the BSE and the NSE on May 17.

As per the data available on the NSE, LIC policyholder’s portion was subscribed 1.99 times on day one, while the quota served for employees was booked 1.17 times. The retail investors portion was subscribed 60%, while non-institutional investors and the qualified institutional buyers’ segments received 27% and 33% bids, respectively.

The government aims to raise around ₹21,000 crore by selling a 3.5% stake in the company. The IPO is completely an offer for sale (OFS) which will see the government selling 22.13 crore (221,374,920) shares of ₹10 face value.

According to the DHRP filed with market regulator SEBI, LIC has reserved shares for its policyholder and the employees. The 10% of the shares are reserved for LIC policyholders, 0.7% for the company’s employees, and 31.25% for household (retail) investors. After policyholders and shareholder reservations, the remaining lot will be allocated in the ratio of 50% for qualified institutional buyers (QIBs), 35% for retail investors, and 15% for non-institutional investors (NIIs).

Of the 22.13 crore issue size, over 2.21 crore shares and 15.81 lakh shares are reserved for the policyholder and the employees. Besides, 9.88 crore shares are reserved for qualified institutional buyers and over 2.96 crore shares for non-institutional buyers. LIC employees and retail investors will get a discount of ₹45 per share, while LIC policyholders would get a discount of ₹60 apiece.

Investors can subscribe to the LIC IPO in a lot of 15 equity shares, which means a bidder can invest in a minimum of 15 shares, and in multiples of 15 thereafter. A maximum 14 lots can be applied as LIC has set an investment limit of ₹2 lakh for one investor.

Ahead of the IPO, the insurance behemoth has already raised around ₹5,627 crore from anchor investors, which includes from domestic mutual funds as well as foreign fund houses. The insurer allotted around 59.3 million shares to 123 anchor investors at ₹949 apiece, of which more than 70% comprises of domestic mutual funds such as SBI Mutual Fund, SBI Life Insurance, ICICI Prudential, Nippon Life, Kotak Mahindra Life Insurance, L&T Mutual Fund, Aditya Birla Sun Life, Axis Mutual Fund, HDFC Trustee, Tata Investment Corporation, UTI Mutual Fund, Sundaram Mutual Fund. The key foreign investors which participated in the anchor book included the Government of Singapore, Government Pension Fund Global, BNP Investments LLC, Monetary Authority of Singapore, Societe Generale, Invesco India, and Saint Capital Fund.