Even as the LIC IPO is all set to hit the market this week, investors have started making commitments for the initial public offer. Domestic mutual funds including SBI, Aditya Birla, ICICI Prudential, HDFC and Kotak have made commitments of Rs 150-1,000 crore each for the public 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 the Indian primary equity market issuances in the last financial year, the ET report added. It said half of the retail subscriptions are expected to come from the country’s western region, including Maharashtra, Gujarat and Rajasthan.
Norway’s Norges Bank Investment Management, Singapore’s GIC Pte, and Abu Dhabi Investment Authority have also committed to becoming anchor investors in the LIC IPO, according to a Bloomberg report. The IPO is set to be launched on May 4 and will close on May 9. The IPO subscription window for anchor investors will be opened on May 2.
LIC IPO: Date, Size, Quota
The price band for the LIC IPO, which will open for the public and policyholders on May 4 and continue till May 9, has been fixed at Rs 902-Rs 949 per equity share. It will have a Rs 60 per equity share discount for policyholders, and a Rs 45 discount for employees and retail investors. The share allotment is likely to be done on May 12 and its listing will take place on May 17.
Retail investors will have a quota of 35 per cent of the IPO size, while 10 per cent of the IPO shares will be reserved for policyholders. Qualified institutional buyers will have access to 50 per cent of the shares. The remaining five per cent is reserved for non-institutional buyers.
The IPO is expected to garner up to Rs 21,000 crore. Its valuation stands at Rs 6,00,000 crore, which is 1.11 times the embedded value of around Rs 5,40,000 crore. A bidder can invest in a minimum of one lot comprising 15 shares, and in multiples of 15 thereafter with a maximum cap of 14 lots.
The valuation of LIC is “fair and attractive” and the government expects significant participation of retail investors in the LIC IPO. “LIC IPO will not crowd out capital and monetary supply in the market. The initial public offering is right-sized, given the constraints in the market. The government has a long commitment to list LIC on the stock exchange and the listing LIC is a long-term strategic vision of the government,” DIPAM Secretary Tuhin Kanta Pandey has said.
Brokerages such as Samco Securities, Religare Broking, Anand Rathi and Marwadi Financial Services have given the ‘subscribe’ rating to the IPO.
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