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LIC IPO subscribed 2.9 times; Govt to raise ∼Rs 21,000cr

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LIC IPO subscribed nearly 3 times_ govt raises Rs 21,000 cr

An initial public offering (IPO) of Life Insurance Corporation (LIC), India’s biggest public offer, was subscribed 2.95 times on the last day of offer period i.e. on May 9, 2022. This will help the government to raise about Rs 21,000 crore. 

  • Notably, against 16,20,78,067 shares on offer, 47,83,25,760 bids were received.
  • With this IPO, the government has diluted its 3.5% stake in LIC through the Offer for Sale (OFS).

Data on Shares Offered and Bids:

i.The Qualified Institutional Buyers (QIBs) category was subscribed 2.83 times. 

  • 11.20 crore bids were received for the 3.95 crore shares earmarked for the segment.

ii.For Non-Institutional Investors (NIIs), a total of 8,61,93,060 bids were received for 2,96,48,427 shares reserved for the category, reflecting a subscription of 2.91 times.

iii.Retail individual investors bid for 13.77 crore shares as against 6.9 crore shares on offer for the segment.

  • This results into an over-subscription of 1.99 times.

iv.The policyholders’ portion was subscribed over 6 times, while that for employees was subscribed 4.4 times.

LIC Price Band for Issue:

LIC had fixed the price band at Rs 902-949 per equity share for the issue. The offer includes a reservation for eligible employees and policyholders. The retail investors and eligible employees will get a discount of Rs 45 per equity share, while policyholders will get a discount of Rs 60 per share.

Points to be noted:

i.So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

ii.LIC was formed by merging and nationalising 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore.

  • Its product portfolio comprises 32 individual plans (16 participating and 16 non-participating) and seven individual optional rider benefits. The insurer’s group product portfolio comprises 11 group products.

Recent Related News:

i.On 3rd February 2022, Life Insurance Corporation of India (LIC) and made an alliance to digitally offer a wide range of Life Insurance and investment products to its customers across India. This is LIC’s first association with a private insurance aggregator, which has mainly relied on its 1.33 million agents for distributing products.

ii.In accordance with the report by Crisil, LIC offers the highest Return on Equity (RoE) at 82% amongst all its global peers.

About Life Insurance Corporation (LIC):

Chairperson– Mangalam Ramasubramanian Kumar
Managing Directors– Raj Kumar, Siddhartha Mohanty, Ipe Mini, Bishnu Charan Patnaik
Headquarters– Mumbai, Maharashtra