نوشته‌شده در

LIC IPO subscription: Record applications seen in LIC IPO

LIC IPO subscription: Record applications seen in LIC IPO

Mumbai: Life Insurance Corporation (LIC) of India is likely to garner record applications for its initial public offering (IPO), bankers said a day before the country’s largest public issue opens for subscription for individuals on Wednesday.
The IPO may shatter the 10 million applications mark, beating the record of 4.8 million applications received by the IPO in January 2008, they said. Having raised ₹5,600 crore via anchor investors, LIC is set to see heavy retail demand, the bankers said, pointing to factors such as schemes offered by brokerages to boost opening of demat accounts, the 1.4 million LIC agents and 2,000 branches spread across the country.
The discounts being offered to both employees and policyholders will also attract investors.

LIC IPOET Bureau“The main reason we are expecting strong retail demand is that the LIC IPO is priced cheap. We have kept money on the table to ensure that the investors enjoy listing gains from day one,” said a person involved in the issue, who did not wish to be identified. “In our interactions with large retail investors in key states like Gujarat, we got the feedback that the pricing was lower than what they expected. This is also reflected in the grey market price, which is quoting at a premium currently.”
LIC is currently commanding a premium of Rs 85 per share in the grey market, about 9% more than its price band of Rs 902-949 per share. Though the premium has declined to Rs 85 a share from Rs 90 in the past two days, it is still substantial given the large discount being offered to employees as well as policyholders.
Out of the 221.3 million shares for sale, LIC has reserved about 1.58 million shares or 0.71% for employees, while 22.1 million shares or about 10% are reserved for policyholders. Retail and employees will get a Rs 45 discount per share, while policyholders will get a Rs 60 discount per share.

There are an estimated 300 million LIC policyholders in India and if the demand for opening demat accounts is anything to go by, retail demand will be robust.
“The policyholder category is new for everyone and investors have, in great numbers, linked their PAN with their LIC policy to be eligible for the policyholder category in the LIC IPO. The LIC IPO may prompt many dormant demat accounts to become active if market conditions are conducive,” said Mohit Mehra, head-IPO at Zerodha, India’s largest brokerage.
Nearly 9.1 million new demat accounts were opened between January and March, as per the latest data from the two depositories, National Securities Depository Limited (NSDL) and Central Depository Service (India) Limited (). Demat accounts increased to 89.7 million, as of March 31 this year, from 80.6 million, as of December 31, 2021.
Brokerages came out with several schemes, including lifetime free demat accounts, gift vouchers and physical counters in key LIC offices to facilitate investors.

.

نوشته‌شده در

Is LIC IPO bad news for other insurance stocks?

Is LIC IPO bad news for other insurance stocks?

Next month’s mammoth stock market debut for India’s Life Insurance Corporation (LIC) has battered shares in other insurers as investors trim their holdings to make room for the state-owned giant, fund managers and analysts said.

The flotation, potentially raising $8 billion, likely will continue to drag on LIC’s competitors for about a year and could spread to other sectors, they said.

The government filed draft papers on Sunday with India’s market regulator to sell 5% of the company’s shares in what could be the world’s third-biggest insurance IPO ever and one of this year’s biggest Asian share sales, according to Refinitiv data.

“This is the biggest one and you have to make space for this,” said a fund manager who asked not to be named. “Historically, market leaders are the first ones that list. This is a rare moment when a large player is being listed very late.”

The 66-year-old company, dominating India’s insurance industry with more than 280 million policies, is the fifth-biggest global insurer in terms of insurance premium collection in 2020, the latest year for which statistics are available. It had 39.56 trillion rupees ($527 billion) of assets under management as of September.

“For any fund manager, having a player that owns over 60% of the market share instead of individually owning those that have 10%-11% market share is a very natural aspiration,” said Vidya Bala, co-founder of PrimeInvestor, a stocks and mutual funds research firm.

Fund managers have already started reducing their exposure to the three listed private life insurers, the fund manager and Bala said.

Shares in ICICI Pru have dropped 10.4% this year, while HDFC Life is down 9.7% and SBI Life 6.2%, compared with a marginal 0.2% decline in the blue-chip Nifty 50 index for the period.

LIC’s listing could dump the equivalent of nearly 60% of the three insurers’ free-float capitalisation on the market, Macquarie said in a report this week, adding that the outlook for them remains challenging.

If LIC’s valuation is attractive, the pressure could spread beyond insurers, weighing on consumer goods firms and some non-banking financial companies, two fund managers said.

“When IPOs of this big size come, they suck out the liquidity from the system,” one of the fund managers said. “If there’s room full of people at a party and a big guy comes in, you have to create space for him.”

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint.
Download
our App Now!!

.