The largest ever IPO of the Indian primary markets, aggregating to Rs 20,557 crore, is open for subscription till May 09. The retail bidders can bid for the issue even on Saturday, an unusual move aimed at attracting investors.
According to data from BSE, investors made bids for 24,33,13,395 equity shares or 1.5 times compared to the 16,20,78,067 equity shares offered for the subscription by 2 pm on Saturday, May 07.
Among the five categories, the quotas for retailers, employees and policyholders were fully subscribed. The portion for policyholders was subscribed 4.26 times, followed by 3.31 times subscription for employee’s allocation.
The portion for qualified institutional buyers was subscribed 0.67 times, whereas the allocation for non-institutional bidders was at 0.87 times so far.
The issue is entirely an offer for sale of about 22.13 crore equity shares by the government of India, which owns 100 per cent stake in the insurer, but will offload only 3.5 per cent stake of the company.
The company will sell its shares in the range of Rs 902-949 apeice but has given a discount of Rs 60 per share to its policyholders, who will bid for the issue.Eligible Employees and retail bidders will get a discount of Rs 45 per share .
The company has reserved 50 per cent of the net issue for the qualified institutional bidders (QIB), where non-institutional bidders (NIIs) will get 15 per cent of the issue. Remaining 35 per cent portion has been allocated to retail bidders.
Life Insurance Corporation of India is valued at Rs 6 lakh crore, which is about 1.12 times its embedded value (EV) or Rs 5.4 lakh crore. It is quite reasonable to its listed peers, brokerages said.
The AUM of LIC jumped about 10 per cent to Rs 37,46,404.47 at the end of financial year 2021 from Rs 34,14,174.57 crore in the previous year. The net profit of the company jumped to Rs 2,974.14 crore from Rs 2,710.48 crore.
For the period ended December 31, 2021, LIC had a total AUM of Rs 40,90,786.78 crore and reported a net profit of Rs 1,715.31 crore.
The majority of brokerages are bullish on IPO or LIC and have suggested subscribing to it. However, some have raised concerns over its declining market shares, overhang of future stake sales by the government.
LIC is the largest player in the underpenetrated Indian life insurance sector, is a trusted brand and a customer-centric business model, with a presence across India through an omni-channel distribution network with an unparalleled agency force, said Hem Securities.
“Being the largest asset manager in India with an established track record of financial performance and profitable growth looks like a decent investment avenue,” it added with a ‘subscribe’ rating on the issue.
LIC is the fifth largest life insurer in the world by life insurance gross written premium (GWP), whereas 10th largest insurer globally by total assets. By the end of FY21, LIC had 66 per cent market share in new business premium (NBP).
There are concerns about losing market share to private players and having lower profitability and revenue growth when compared to private players, said LKP Securities, which has a ‘subscribe’ rating on the issue.
“However, we believe that LICs distribution advantage, increasing sales mix of direct and corporate channels, and a gradual shift to high margin Non-participating products could be possible drivers for LICs future growth, negating lower than industry growth rates,” the brokerage recently said.
LIC operates through 2048 branches, 113 divisional offices, and 1,554 Satellite Offices. It operates globally including in countries like Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait and the United Kingdom.
LIC has garnered over Rs 5,627 crore from the anchor investors by alloting them 5.92 crore shares at Rs 949 per share, the insurer said in a filing to exchanges. Out of them 4.2 crore shares were allocated to 15 domestic mutual funds.