Even with LIC’s IPO all set to hit the market this week, investors have begun to make commitments for the first public offer. Domestic investment funds including SBI, Aditya Birla, ICICI Prudential, HDFC and Kotak have pledged Rs 150-1,000 crore each for the tender offer, according to a report.
Life Insurance Corporation (LIC) estimates up to 70 lakh retail applications, which is more than five times the average retail applications received for India’s primary stock market issues in the past fiscal year, the ET report added. It said half of its retail subscriptions are expected to come from the western region of the country, which includes Maharashtra, Gujarat and Rajasthan.
Norway’s Norges Bank Investment Management, Singapore’s GIC Pte and Abu Dhabi Investment Authority have also committed to become anchor investors in the LIC IPO, according to a Bloomberg report. The IPO will launch on May 4 and will close on May 9. The Anchor Investor IPO subscription window will open on May 2.
LIC IPO: date, size, quota
The price range for the LIC IPO, which opens to the public and policyholders on May 4 and lasts until May 9, is set at Rs 902-Rs 949 per share of shares. It has a discount of Rs 60 per share for policyholders and a discount of Rs 45 for employees and private investors. The allotment of the shares is expected to take place on May 12 and the listing will take place on May 17.
Retail investors will receive a quota of 35 percent of the IPO size, while 10 percent of the IPO shares will be reserved for policyholders. Qualified institutional buyers get access to 50 percent of the shares. The remaining five percent is reserved for non-institutional buyers.
The IPO is expected to reach Rs 21,000 crore. The valuation stands at Rs 6,000,000 crore which is 1.11 times the embedded value of about Rs 5.40,000 crore. A bidder can invest in a minimum of one lot of 15 shares and then in multiples of 15 with a maximum of 14 lots.
The valuation of LIC is “reasonable and attractive” and the government expects significant private investor participation in the LIC IPO. “LIC IPO will not displace capital and money supply in the market. The initial public offering is appropriately sized, given the constraints in the market. The government has long been committed to listing LIC on the exchange and delisting LIC is a long-term strategic vision of the government,” said DIPAM Secretary Tuhin Kanta Pandey.
Brokers such as Samco Securities, Religare Broking, Anand Rathi and Marwadi Financial Services have given the IPO a ‘subscribe’ rating.
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