Weak market debut for LIC, lists at 8% discount

Disappointing investors on listing day, shares of Life Insurance Corporation of India (LIC), which mobilised around Rs 20,557 crore through the country’s biggest initial public offering (IPO) recently, plunged nearly 8 per cent in its market debut on Tuesday.

LIC, India’s biggest insurer and domestic financial institution, started trading at Rs 867.20 — at a discount of 8.62 per cent — on the BSE as against the issue price of Rs 949 per share. The share closed the day at Rs 875.45, a discount of 7.75 per cent, even as the volatile stock markets staged a rally, with the Sensex jumping nearly 1,345 points, or 2.54 per cent.

LIC now has a market value of around Rs 5.53 lakh crore and is India’s fifth biggest company in terms of market capitalisation after Reliance Industries, TCS, HDFC Bank and Infosys.

“We were not expecting it to pick up as the markets were jittery… expect it to pick up. I am sure a lot of policy-holders who had missed out in the IPO will pick up LIC from the market now. I don’t see why it should be tepid for too long,” LIC Chairman M R Kumar said while speaking to reporters after the listing ceremony.

While LIC’s IPO had received good response from policy-holders, foreign investors were not very enthusiastic about the offer. “That has been due to global sentiment which has really tested Indian investors. The way to look at it is, without FPIs, could any other issue have managed this? We saw six times (subscription) from policy-holders. That is huge,” Kumar said.

According to the BSE, the total quantity traded stood at 27.55 lakh shares with a delivery quantity percentage of 47.05 per cent. Total quantity traded at the NSE stood at 487.92 lakh shares with a delivery quantity percentage of 39.18 per cent. Total turnover (BSE and NSE) on the first day stood at Rs 4,591.10 crore.

LIC policy-holders and retail investors got the shares at a price of Rs 889 and Rs 904 per share respectively. The IPO closed on May 9 and shares were allocated to bidders on May 12. The government sold over 22.13 crore shares or 3.5 per cent stake in LIC through the IPO at a price band of Rs 902-949 per share.

The retail investors and eligible employees of LIC were offered a discount of Rs 45 per equity share over the issue price, while policy-holders got a discount of Rs 60 per share.

The share sale fetched the government around Rs 20,557 crore. The offer, which closed with nearly three times subscription, was predominately lapped up by retail and institutional buyers, but foreign investor participation remained muted.

Last month, LIC had reduced its IPO size to 3.5 per cent from 5 per cent decided earlier due to the prevailing market conditions. Even after the reduced size of over Rs 20,557 crore, LIC IPO is the biggest IPO ever in the country.

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