Bhubaneswar: Within two and a half hours of its opening on Wednesday, the initial public offering (IPO) of LIC was fully subscribed by its policyholders.
The policyholders quota for IPO of insurance behemoth Life Insurance Corporation of India (LIC) was fully subscribed with retail portion receiving 33 per cent bid till 12.30 pm on first day. The employees’ quote has been subscribed 51 per cent so far.
However, the non-institutional category, consisting of corporates, individuals, and others has seen muted response with only 5% subscription so far.
The LIC has fixed a price band of Rs 902-949 for the public issue and offered a special discount of Rs 60 to policyholders and Rs 45 per share to retail investors and its employees.
The country’s largest insurance company has around 29 crore policyholders, 2 lakh employees and 13 lakh agents covering 91% districts of the country. It manages asset under management (AUM) of 39 lakh crore, which is more than the GDP of 150 countries and more than total AUM managed by the mutual fund industry which is around 38 lakh crore, according to Business Today.
Market analysts consider the IPO as a milestone event for the Indian capital market as it may bring millions of new investors from Tier 2 and Tier 3 towns for the first time. Most of the brokerage houses have given a positive rating to the IPO given its fair valuation.
“At the upper price levels, LIC’s embedded value with a market cap of Rs 6,00,200 crore is quite lower than HDFC Life Insurance, SBI Life Insurance and ICICI Prudential Life Insurance where the average embedded value stood at Rs 3,10,500 crore and the average market capitalisation-to-embedded value ratio arrived at 3.4 times. Hence, the issue looks quite attractive to investors,” said a report of Anand Rathi Share and Stock Brokers.
