ETCFONEW DELHI: Life Insurance Corporation (LIC) on Wednesday said it will launch its initial public offer (IPO) on May 4, Wednesday. The issue will close on May 9, Monday.
The state-owned insurer said the government will be selling shares in the price band of Rs 902-949. The government plans to offload 3.5 per cent stake or 22.13 crore shares in the company and raise Rs 20,557.23 crore. This is well short of earlier projection of about Rs 60,000 crore.
Investors can bid for shares in a lot size of 15 shares, and multiples thereof. There is an employee reservation of 1.58 crore shares while 2.21 crore shares are reserved for policyholders. Retail and employees will get Rs 45 discount, while policyholders will get Rs 60 discount.
Half of the shares are reserved for qualified institutional buyers (QIB), 15 per cent of the shares will be reserved for non-institutional investors while the rest is for retail investors.
Shares will be allotted to successful bidders on May 12, and the refund to unsuccessful bidders will be credited on the same day. Shares will be credited to the demat account by May 16 and the stock will start trading in the secondary market from May 17 onwards.
Analysts are expecting record demat and trading opening in the coming days thanks to increased investor participation due to the IPO. Many brokers have already seen massive mobilization of users. For instance, Axis Securities said it opened around 45,000 accounts for the IPO alone last month. Of these, 40 per cent of customers are new to the market.
"With the LIC IPO coming up, we believe that May will be a record month for demat account openings in recent times. It is a milestone event for Indian Capital markets and is expected to bring millions of new investors,” said Varun Sridhar, CEO, Paytm Money. “More importantly, given the trust that LIC has built with the common man over the decades, a lot of these investors are expected to come from tier 2 & 3 towns.”
Some analysts see weakness in the stock post listing but that may just be for the short term. In the long run, the counter may make money for investors they say.
"While near-term market volatility is likely to weigh on the stock performance, we remain positive from the long-term perspective,” said B Gopkumar, MD & CEO, Axis Securities. “Given the under penetration of insurance and improving financialization of savings, we expect LIC to maintain its market leadership position backed by robust business traction.”
“Additionally, a strong rebound in terms of NBP/APE growth enabling market share gains in Q4FY22 hints at strong investor interest before the IPO. Thus, we believe investors should subscribe to the IPO for the long term, as we are confident that the structural story for the life insurance industry remains intact as uncertainties during the pandemic have highlighted the benefits of life insurance"
The state-owned insurer said the government will be selling shares in the price band of Rs 902-949. The government plans to offload 3.5 per cent stake or 22.13 crore shares in the company and raise Rs 20,557.23 crore. This is well short of earlier projection of about Rs 60,000 crore.
Investors can bid for shares in a lot size of 15 shares, and multiples thereof. There is an employee reservation of 1.58 crore shares while 2.21 crore shares are reserved for policyholders. Retail and employees will get Rs 45 discount, while policyholders will get Rs 60 discount.
Half of the shares are reserved for qualified institutional buyers (QIB), 15 per cent of the shares will be reserved for non-institutional investors while the rest is for retail investors.
Shares will be allotted to successful bidders on May 12, and the refund to unsuccessful bidders will be credited on the same day. Shares will be credited to the demat account by May 16 and the stock will start trading in the secondary market from May 17 onwards.
Analysts are expecting record demat and trading opening in the coming days thanks to increased investor participation due to the IPO. Many brokers have already seen massive mobilization of users. For instance, Axis Securities said it opened around 45,000 accounts for the IPO alone last month. Of these, 40 per cent of customers are new to the market.
"With the LIC IPO coming up, we believe that May will be a record month for demat account openings in recent times. It is a milestone event for Indian Capital markets and is expected to bring millions of new investors,” said Varun Sridhar, CEO, Paytm Money. “More importantly, given the trust that LIC has built with the common man over the decades, a lot of these investors are expected to come from tier 2 & 3 towns.”
Some analysts see weakness in the stock post listing but that may just be for the short term. In the long run, the counter may make money for investors they say.
"While near-term market volatility is likely to weigh on the stock performance, we remain positive from the long-term perspective,” said B Gopkumar, MD & CEO, Axis Securities. “Given the under penetration of insurance and improving financialization of savings, we expect LIC to maintain its market leadership position backed by robust business traction.”
“Additionally, a strong rebound in terms of NBP/APE growth enabling market share gains in Q4FY22 hints at strong investor interest before the IPO. Thus, we believe investors should subscribe to the IPO for the long term, as we are confident that the structural story for the life insurance industry remains intact as uncertainties during the pandemic have highlighted the benefits of life insurance"
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