LIC share sale fetches Rs20,557 cr at Rs949 per share
16 May 2022
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Government of India raised Rs20,557 crore ($2.7 billion) by selling 3.5 per cent of its stake in the life insurance behemoth, in what is India’s biggest initial share sale. LIC’s offering is also the world’s fourth-biggest this year, according to Bloomberg data.
The issue price has been fixed at the top of the price band, at Rs949 apiece, following strong demand from local investors and a last-minute rush by foreign funds. LIC shares were offered at Rs902 to Rs949 apiece. Trading on the stock exchange is due to begin 17 May.
Nearly 52 per cent of the retail investors eligible for 210 shares each (Rs2 lakh per investor at Rs949), received allotment of 78 shares each, while the rest were allotted 77 shares. The retail portion of 69.2 million shares was subscribed 1.61 times.
The largest oversubscribed category of policyholders at 4.37 times over the reserved quantity of 22.1 million shares saw 95 per cent applicants eligible for 210 shares (Rs2 lakh upper limit) receiving 48 shares each while 5 per cent got 49 shares each.
Foreign institutional investors, who wanted to buy cheap, stepped up their bids for the sale in the last hours before the close of subscription this week.
LIC’s debut comes at a time when capital market activities have significantly slowed globally as the war in Ukraine stoke market volatility and sapped investor appetite.
Small investors who applied for the minimum lot of 15 shares in LIC’s mega IPO have received full allotment, while the remaining shares were distributed proportionately among other investors.
Retail investors and LIC policyholders were among the most enthusiastic for the share offer, thanks to the price discounts. The portion reserved for them was fully taken up days before the offering was closed. The anchor portion of the IPO drew in sovereign funds from Norway and Singapore while other foreign investors picked up pace only on the last day.
Employee category was oversubscribed 2.94 times. Around 94 per cent of those eligible for 210 shares each were proportionately allotted 71 shares while 6 per cet got 72 shares. Of the high networth investor category eligible for a minimum of 225 shares each, 65 per cent received 95 shares each while the rest were allotted 94 shares as the category saw oversubscription of 2.37 times the shares reserved.
Nearly 162.1 million shares worth Rs14,930 crore were reserved for institutional investors (QIBs), HNIs, retail, policyholders and LIC employees. The issuer reserved 59.2 million shares worth Rs5,627 crore from anchor investors.
Overall, the LIC offer was oversubscribed by nearly three times. The money will help the government bridge a budget deficit that’s expected to widen as commodity prices soar across the world.
