LIC IPO receives record applications from retail investors

The initial public offering (IPO) of Life Insurance Corporation (LIC) continued to receive strong interest from employees, policyholders and retail investors as the issue got subscribed 1.78 times till May 8, the fifth day of bidding. The country’s biggest public issue received 29.07 crore bids against 16.02 crore shares on the offer.

The portion reserved for retail investors was fully subscribed on third day and 1.59 times by the end of the fifth day of subscription. The issue received 10.9 crore bids from retail individual investors, against 6.9 crore shares set aside for them.

It may be recalled, the initial share sale of Reliance Power in 2008 had received 4.8 million applications. Fourteen years later, LIC smashed this record as it received nearly 6 million applications from retail equity investors.

The LIC IPO opened for subscription on May 4 and will close on May 9. Bidding for the issue was also open on Saturday and Sunday.

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The IPO is divided into three parts: 50 percent quota has been reserved for qualified institutional buyers (QIB), 35 percent for non-institutional investors (NII), and the remaining 15 percent for retail individual investors (RII). A 10% discount was also offered to policyholders.

The price band of the IPO was fixed at Rs 902 to Rs 949 per equity sharen. LIC policyholders receive a discount of Rs 60 per equity share, while retail investors and qualifying employees receive a discount of Rs 45 per equity share.

The issue is fully an offer for sale of around 22.13 crore equity shares held by the Indian government, that owns 100% of the insurance behemoth but will only sell 3.5 percent of it. By selling 3.5 percent stake in the LIC, the government hopes to raise Rs 21,000 crore.

Due to the unstable market conditions, LIC reduced the IPO size from 5 percent to 3.5 percent. Even with the lower size of roughly Rs 20,557 crore, the LIC IPO remains the country's largest initial public offering.

LIC had raised Rs 5,627 crore from anchor investors by allocating 5.92 lakh shares at Rs 949 per share.