Shares of Life Insurance Corporation (LIC) of India, the country’s largest insurance company, made a weak debut on Dalal Street on May 17, with stock price listing at a discount of over 8% against the issue price. The fall in the share of the state-owned insurer was in sharp contrast to the strong broader market trend, with the Sensex and the Nifty rising over 1% in early trade.
LIC shares, which admitted to dealings in the list of ''A'' group securities, listed at ₹867.20 on the BSE, down 8.6% from the upper end of the IPO price band of ₹902 to ₹949 per share. On the National Stock Exchange (NSE), the stock opened at ₹872 apiece, 8.1% lower than the issue price of ₹949.
Post listing, LIC shares moved higher and touched an intraday high of ₹920 on the BSE, on the back of the strong volume. Similarly, it hit an intraday high of ₹914.9 on the NSE. At the time of reporting, the stock was trading 4.9% lower at ₹902 on the BSE.
The weak listing of LIC was in line with expectations as market sentiments remained fragile amid persistent concerns about the Russia-Ukraine crisis, higher interest rate hike, and boiling inflation. The LIC shares were also trading at a discount in the grey market, an unofficial market for unlisted securities, indicating that the share might have muted or soft opening at the domestic bourses. Though the grey market premium is not an accurate indicator of a stock price always and may vary as per market conditions.
₹20,557-cr IPO got overwhelming response from investors
Prime Minister Narendra Modi-led central government had raised ₹20,557.23 crore by selling 3.5% shares in LIC of India in the country’s largest-ever IPO. The highly anticipated IPO of LIC of India received overwhelming response from investors, with the issue oversubscribing 2.95 times. The policyholder portion of the IPO has been subscribed 6.11 times, while the portion reserved for employees was subscribed 4.39 times. Retail investors bid 1.99 times the allocated bucket, and non-institutional investors’ portion was subscribed 2.91 times. The issue raised a ₹43,933 crore demand against the intended offer size of ₹21,000 crore.
LIC had reserved shares for its policyholder and the employees. 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 were offered a discount of ₹45 per share, while LIC policyholders were given a rebate of ₹60 apiece.
Ahead of the IPO, LIC of India raised over ₹5,000 crore through anchor investors, which received strong participation from domestic mutual funds as well as foreign fund houses. The insurer allotted around 59.3 million shares to 123 anchor investors at Rs 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.
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