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The IPO of Life Insurance Corporation of India (LIC) is the biggest IPO in Indian history. The IPO witnessed substantial investment from several anchor investors in the past 2 days.
LIC is India's largest insurer holding about 62% market share. It is ranked 5th globally by Gross Written Premium (GWP) & 10th globally in terms of total assets. The company has the largest agent network in India which is 6.8x times higher than the 2nd largest life insurer in India.
The company was formed in 1956 by merging and nationalizing 245 private insurers with an initial capital of Rs 5 crores. Its competitors are no match for this insurance behemoth as the second largest, SBI Life, has a market share of a mere 9%.
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The IPO, worth a massive Rs 21,000 crores, is open for subscription from today and will stay open till 9th May 2022. The price band for the issue is Rs 902-949 and each lot shall contain 15 shares. The face value of these shares is Rs 10 each and a Grey Market Premium (GMP) of around Rs 65 is expected.
50% of the issue is reserved for Qualified Institutional Buyers, 15% for Non-Institutional buyers, and the balance 35% for Retail investors. In the issue, employees of the company will get a discount of Rs 45 per share and all policyholders will get a discount of Rs 60 per share.
The company is valued at Rs 6,00,000 crore and the Government of India, which is presently the only shareholder of the company, is selling 3.5% of its stake. The issue does not involve any fresh issues, it is purely an offer for sale after which the government will have a holding of 96.5% in the insurance giant.
The growth opportunities for the company are huge. India's Life Insurance penetration is 3.2% against 7.6%-8.4% in other Asian countries like Thailand and South Korea. Moreover, the protection gap in India currently stands at 83%, the highest in the Asia Pacific region.
The IPO has seen huge interest and involvement from investors as anchor investors invested over Rs 5,000 crores in the anchor book. SBI Equity Hybrid had the largest investment in the anchor book, 9.22%. 99 mutual funds were invested in the anchor investment as 71% was allotted to domestic mutual funds.
By 15:18 today, the IPO's policyholders portion has been subscribed 1.66x times as the overall IPO has seen 50% subscription.
Article by Aman Agarwal.
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