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LIC’s Rs 20,557-crore public offer fully subscribed on Day 2

Mumbai: The ₹20,557-crore initial public offering of Life Insurance Corporation (LIC) was fully subscribed on Thursday – the second day of the offer. The country’s largest-ever IPO received bids for 16.68 crore shares against the 16.21 crore on offer, according to subscription details on the bourses at 8 PM.

The insurer’s policyholders and employees were the top bidders in the issue. The portion set aside for LIC’s policyholders was subscribed three times, while its employees’ category was subscribed 3.11 times. Retail investors’ portion was subscribed 0.93 times, while non-institutional investor category, which included high net worth investors (HNIs), was subscribed 0.46 times. Qualified institutional buyers’ portion saw a subscription of 0.47 times.

To facilitate better participation among retail investors, the government has urged all bank branches designated to ASBA (application supported by blocked amount) applications to be kept open to the public on Sunday, May 8.

On Monday, LIC raised ₹5,627 crore from anchor investors, who were allotted 5.93 crore shares at the upper price band of ₹902 to ₹949 apiece.

About 35% of the total shares in the offer are reserved for retail investors, while 10% has been earmarked for LIC’s policyholders. Policyholders will get the shares at a discount of ₹60 per share, while retail investors and employees will get a discount of ₹45 per share. The issue will close on Monday, May 9.

Most domestic brokerages have advised subscribing to the LIC issue, citing attractive valuations compared to the listed private life insurers. Moreover, the discounts to retail investors and LIC policyholders make the issue more attractive for these segments.

LIC, at its upper price band, is the third-cheapest insurance company among the top 10 globally, after Ping An Insurance and China Life Insurance. The government has priced the IPO at 1.11 times its embedded value (EV) compared to 0.21 of China Insurance or 0.54 of Ping An Insurance. In unofficial grey market, LIC’s IPO is currently trading at a premium of ₹38 per share over its issue price.

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