# India’s $2.7 billion LIC IPO subscribed 67% on first day Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-05-04 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: LIC IPO Oversubscribed at 67% on First Day Despite RBI Rate Meta Description: LIC's $2.7 billion IPO sees strong demand on day one, despite market volatility. Analysts optimistic about the issue's success. Learn more. URL: https://financedigest.com/indias-2-7-billion-lic-ipo-subscribed-67-on-first-dayhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-05-04t100955z2lynxnpei4304brtroptp4india-lic-ipo-1736815785777-compressed.jpg) By Nupur Anand and Chris Thomas MUMBAI (Reuters) -Life Insurance Corp’s (LIC) $2.7 billion IPO, India’s largest public issue, was subscribed 67% on the first day of bidding, even as a surprise rate hike by the central bank roiled markets. Investors bid for 108.7 million shares on Wednesday, compared with the total 162.1 million shares on offer, with the portions reserved for employees and policyholders already oversubscribed, exchange data showed https://www.nseindia.com/market-data/issue-information?symbol=LICI&series=EQ&type=Active. The demand for LIC’s IPO came even as the stock market fell 2.3% after the Reserve Bank of India unexpectedly hiked interest [rates to tame inflation](https://www.financedigest.com/german-inflation-rate-to-ease-over-course-of-2023-econ-minister.html "German inflation rate to ease over course of 2023 – econ minister"). \[.BO\] Considering the size of the issue, the demand seems to be quite good,” said Yesha Shah, head of [equity research](https://www.financedigest.com/equity-markets-show-strong-end-of-year-performance-in-camradatas-q4-2017-investment-research-reports.html "Equity Markets Show Strong End of Year Performance in CAMRADATA’s Q4 2017 Investment Research Reports") at Samco Securities. While the RBI [rate hike](https://www.financedigest.com/hopes-of-slowdown-in-rate-hikes-bolster-shares-ahead-of-u-s-gdp.html "Hopes of slowdown in rate hikes bolster shares ahead of U.S. GDP") has affected the market sentiment overall, we think it will have a limited impact on the LIC IPO … because of the company’s decent fundamentals, [attractive pricing and valuation.”](https://www.financedigest.com/technical-textiles-market-2021-2031-potential-growth-attractive-valuation-make-it-is-a-long-term-investment.html "Technical Textiles Market (2021–2031)| Potential growth, attractive valuation make it is a long-term investment") The Indian government expects to raise up to $2.7 billion, just a third of its original target, from [selling a 3.5% stake](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount") in the country’s top insurance company, giving it an initial value of $78.52 billion. The subscription, set to close on May 9, is offering a discount to employees and retail [investors of 45 rupees per share](https://www.financedigest.com/asian-shares-muted-as-investors-fret-over-china-reopening.html "Asian shares muted as investors fret over China reopening"). LIC policyholders will be [offered a discount](https://www.financedigest.com/discount-dining-clubs-tastecard-and-gourmet-society-grow-their-offering-as-chimichanga-and-spaghetti-house-both-sign-up.html "Discount dining clubs tastecard and Gourmet Society grow their offering as Chimichanga and Spaghetti House both sign up") of 60 rupees per share. There could be some [impact on listing gains](https://www.financedigest.com/oil-gains-as-investors-see-limited-omicron-impact-on-demand.html "Oil gains as investors see limited Omicron impact on demand"), but we still feel the IPO will fly through. The real test will be on Thursday when we should see the entire impact of the [rate hike](https://www.financedigest.com/uk-stocks-slip-as-rate-hike-worries-grip-investors.html "UK stocks slip as rate hike worries grip investors") in markets,” Shah said. WOOING POLICYHOLDERS The portion [set aside for policyholders was subscribed 1.99 times](https://www.financedigest.com/oneweb-eutelsat-set-for-secondary-london-listing-the-times.html "OneWeb-Eutelsat set for secondary London listing – The Times") at the end of bidding on Wednesday, employees by 1.17 times and retail investors by 0.6 times. Compared to private players, LIC’s targeted valuation at 1.1 times its embedded value offers a significant discount, which will be a [comfort for investors,”](https://www.financedigest.com/chinas-patchy-covid-easing-sows-confusion-but-comforts-investors.html "China’s patchy COVID easing sows confusion but comforts investors") said Sneha Poddar, research analyst at Motilal Oswal Financial Services. The [price range for the issue has been set between 902 rupees and 949 rupees per share](https://www.financedigest.com/netflix-cuts-prices-in-some-countries-to-boost-subscriptions-shares-drop.html "Netflix cuts prices in some countries to boost subscriptions, shares drop"). After a reservation for employees and policyholders, the [remaining shares](https://www.financedigest.com/kuehne-raises-lufthansa-stake-to-17-5-as-germany-sells-remaining-shares.html "Kuehne raises Lufthansa stake to 17.5% as Germany sells remaining shares") will be allocated in a ratio of 50% to qualified institutional buyers, 35% to retail investors and 15% for non-institutional investors. LIC [shares were trading](https://www.financedigest.com/social-trading-is-the-new-way-that-gen-z-are-getting-their-share-of-the-pie.html "Social Trading is The New Way That Gen Z Are Getting Their Share of The Pie") in the “grey” market at a premium of 95 rupees, around 1,044 rupees apiece. To drum up demand from retail investors, in addition to heavy advertising in local newspapers, some 1.2 million field agents were dispatched across India to woo many of LIC’s more than 250 million policyholders to [buy the shares](https://www.financedigest.com/uks-bellway-to-buy-back-shares-hike-social-housing-output.html "UK’s Bellway to buy back shares, hike social housing output"). Policyholders were also flooded with text messages earlier this [year recommending they open](https://www.financedigest.com/four-years-of-open-banking-2022-may-be-the-best-year-yet.html "Four years of Open Banking: 2022 may be the best year yet ") an electronic stock holding account early so they can take part in the IPO. Earlier this week, the 59.3 [million shares set aside for anchor investors](https://www.financedigest.com/optable-closes-20-million-series-a-financing-broadens-investor-syndicate-in-new-round.html "Optable Closes Million Series A Financing, Broadens Investor Syndicate in New Round") were subscribed at 949 rupees apiece. Norwegian [wealth fund Norges Bank Investment Management](https://www.financedigest.com/wealth-management-consultant.html "Wealth management consultant") and the government of Singapore joined the anchor book, along with several domestic mutual funds. The government had initially wanted to list LIC in the financial year that [ended March 31 but chose to delay the sale](https://www.financedigest.com/eu-approves-law-to-end-sales-of-new-co2-emitting-cars-by-2035.html "EU approves law to end sales of new CO2-emitting cars by 2035") after Russia’s invasion of Ukraine and the U.S. Federal Reserve’s interest [rate hikes](https://www.financedigest.com/stocks-euro-gain-amid-divergent-fed-ecb-rate-hike-outlooks.html "Stocks, euro gain amid divergent Fed, ECB rate hike outlooks") triggered a market rout. The 66-year-old company dominates India’s [insurance sector](https://www.financedigest.com/how-data-visualisation-is-helping-the-insurance-sector-understand-environmental-risks.html "How data visualisation is helping the insurance sector understand environmental risks"), with more than 280 million policies. It was the fifth-biggest global insurer in [terms of insurance premium](https://www.financedigest.com/no-exam-term-life-insurance-premiums-explained.html "No-Exam Term Life Insurance Premiums Explained") collection in 2020, the latest year for which statistics are available. (Reporting by Nupur Anand in Mumbai and Chris Thomas in Bengaluru; Editing by Jamie Freed, Mark Potter and Emelia Sithole-Matarise) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---