Lic Ipo anchor book sees high demand: report
LIC IPO: Corporation’s life insurance public offering has received bids from large investors for twice the size of the anchor book, Bloomberg reported, citing sources. LIC will announce the anchor book of ₹5600 crore for the country’s largest public offering of ₹21,000 crore later today.
Life Insurance Corporation (LIC) has set its price range for the initial public offering (IPO) at ₹902 to ₹949 per share. The public offering begins on May 4 and will remain open to bidders until May 9.
Singapore’s GIC Pte and Norway’s sovereign wealth fund are among the top investors, Bloomberg reported, citing sources. The government raises ₹20,557 crores by diluting 3.5% of its stake entirely through a put offer, and will remain the largest initial public offering to date.
LIC IPO will be a pure sale offer. Of the 22.13 crores of shares offered for sale, about 5.93 crores of shares have been reserved from core investors. The booking share of employees is 1.58 million while the booking of policyholders is 22.14 million.
Half of the shares are reserved for qualified institutional buyers (QIBs), 15% of the shares will be reserved for non-institutional investors while the rest are for retail investors. Policyholders will benefit from a reduction of ₹60 per share.
Many brokerage houses have recommended to subscribe to the IPO. LIC has been providing life insurance in India for 65 years and is the largest life insurer in India.
“LIC enjoys a strong market share of 61.6% based on Total Premium and 61.4% based on New Business Premium in 9MFY22. However, LIC has witnessed a decline in the market share of private players. LIC’s market share (on a premium basis) in group business fell from 81% in FY16 to 74% in Q3FY22, while in individual business it fell from 56% to 43% “, Geojit said in a note.
“Due to a higher mix of untied and participating policies, LIC has a 9.9% lower margin in FY21 compared to private players within a range of 20-25%. priced at Rs.949, LIC is available at P/EVPS (Embedded Value Per Share) of 1.1x, a 65% discount to the average valuation of private life insurance players. headwinds such as falling market share, falling short-term persistence ratios and below-normal margins are demanding a discount for private players, the current valuation is attractive given its strong market presence , improved profitability due to changes in surplus distribution standards. Therefore, we are assigning a ‘Subscribe’ rating in the short to medium term,” the brokerage said.
(With contributions from the agency)