LIC IPO subscribed 98% on Day 2: Policyholders 2.93 times, employees 2.08 times, retail 0.88 times
According to statistics, the largest insurance company has currently around 29 crore policyholders, 2 lakh plus employees and 13 lakh agents covering 91 per cent of districts of the country.
- May 5, 2022,
- Updated May 5, 2022 6:05 PM IST
The Initial Public Offering (IPO) of national insurer Life Insurance Corporation of India (LIC) has been subscribed 98 per cent on Day 2. The policyholders' and the employees' quotas have been oversubscribed at 2.9 times and 2.08 times, respectively. The retail portion has received 0.88 times bid so far. Similarly, Qualified Institutional and Non-Institutional Investors have received 40 per cent and 45 per cent subscriptions on the second day of the IPO. The insurance behemoth has fixed a price band of Rs 902-949 for the public issue and offered a special discount of Rs 45 per share to retail investors and employees of LIC and Rs 60 to policyholders.
The discount is available for policyholders, who bought their policy on or before April 13, 2022, the day LIC had filed its draft red herring prospectus with the Securities and Exchange Board of India (SEBI). The government, through the IPO, is disinvesting its 3.5 per cent stake to collect approximately Rs 21,000 crore from the markets.
It is the largest ever IPO. Thus far, Paytm IPO (in 2021) was the largest-ever IPO in the country at Rs 18,300 crore, followed by Coal India Ltd. (CIL) at around Rs 15,500 crore and Reliance Power in 2008 at Rs 11,700 crore.
According to statistics, the largest insurance company has currently around 29 crore policyholders, 2 lakh plus employees and 13 lakh agents covering 91 per cent of districts of the country. It manages Asset under management (AUM) of 39 lakh crore, which is more than the GDP of 150 countries and the total AUM managed by the mutual fund industry which is around 38 lakh core.
At an estimated market cap of Rs 6 lakh crore, the issue is priced at a Market Cap to Embedded Value of 1.1x, which is at a discount compared to its listed India well as global peers which many experts believe has given global and domestic investors a fair chance to grab a bite compared to earlier pricing and valuation. LIC's embedded value is Rs 5.4 lakh crores as of September 30, 2021, according to actuarial firm Milliman Advisors.
"LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value. However, there are concerns with the company like losing market share to private players, lower profitability and revenue growth compared to private players. But the valuation of 1.1 times Price to Embedded Value discounts the above concerns and policyholders getting a discount of Rs 60 makes this a bumper offer," said Santosh Meena, Head of Research, Swastika IInvestmart Ltd.
Also read: LIC IPO: Policyholders and retail portion oversubscribed on Day 1
Also read: Do jumbo IPOs create wealth? Here is what historical numbers have to say
Also read: LIC IPO: Financing curbs could make HNI response a litmus test
The Initial Public Offering (IPO) of national insurer Life Insurance Corporation of India (LIC) has been subscribed 98 per cent on Day 2. The policyholders' and the employees' quotas have been oversubscribed at 2.9 times and 2.08 times, respectively. The retail portion has received 0.88 times bid so far. Similarly, Qualified Institutional and Non-Institutional Investors have received 40 per cent and 45 per cent subscriptions on the second day of the IPO. The insurance behemoth has fixed a price band of Rs 902-949 for the public issue and offered a special discount of Rs 45 per share to retail investors and employees of LIC and Rs 60 to policyholders.
The discount is available for policyholders, who bought their policy on or before April 13, 2022, the day LIC had filed its draft red herring prospectus with the Securities and Exchange Board of India (SEBI). The government, through the IPO, is disinvesting its 3.5 per cent stake to collect approximately Rs 21,000 crore from the markets.
It is the largest ever IPO. Thus far, Paytm IPO (in 2021) was the largest-ever IPO in the country at Rs 18,300 crore, followed by Coal India Ltd. (CIL) at around Rs 15,500 crore and Reliance Power in 2008 at Rs 11,700 crore.
According to statistics, the largest insurance company has currently around 29 crore policyholders, 2 lakh plus employees and 13 lakh agents covering 91 per cent of districts of the country. It manages Asset under management (AUM) of 39 lakh crore, which is more than the GDP of 150 countries and the total AUM managed by the mutual fund industry which is around 38 lakh core.
At an estimated market cap of Rs 6 lakh crore, the issue is priced at a Market Cap to Embedded Value of 1.1x, which is at a discount compared to its listed India well as global peers which many experts believe has given global and domestic investors a fair chance to grab a bite compared to earlier pricing and valuation. LIC's embedded value is Rs 5.4 lakh crores as of September 30, 2021, according to actuarial firm Milliman Advisors.
"LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value. However, there are concerns with the company like losing market share to private players, lower profitability and revenue growth compared to private players. But the valuation of 1.1 times Price to Embedded Value discounts the above concerns and policyholders getting a discount of Rs 60 makes this a bumper offer," said Santosh Meena, Head of Research, Swastika IInvestmart Ltd.
Also read: LIC IPO: Policyholders and retail portion oversubscribed on Day 1
Also read: Do jumbo IPOs create wealth? Here is what historical numbers have to say
Also read: LIC IPO: Financing curbs could make HNI response a litmus test