Ahead of LIC IPO, grey market premium signals listing above Rs 1,000 per share

The initial public offer (IPO) of Life Insurance Corporation of India (LIC) will open for retail and institutional investors today. The grey market premium (GMP) of the share sale stands at Rs 85 today which implies that the stock is expected to list at over Rs 1,000 per share.

Shares will be available in a price band of Rs 902- Rs 949 during the IPO. With GMP at Rs 85, the stock is likely to make its market debut at (Rs 949 plus Rs 85) Rs 1034 per share. This amounts to a 9 per cent premium over the issue price. The insurance behemoth plans to raise Rs 21,000 crore from investors. The issue will close on May 9.

On Monday, LIC collected Rs 5,620 crore from anchor investors, signaling strong interest ahead of the share sale. Norwegian wealth fund Norges Bank Investment Management and the Government of Singapore were among the subscribers to the anchor book.

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Besides other global funds, domestic mutual fund houses such as HDFC Mutual Fund, SBI, ICICI and Kotak also participated in the anchor issue of LIC. Over 20 investors had expressed interest in subscribing to the anchor book, according to reports.

The state-run insurer had reserved 59.29 million shares for anchor investors. Anchor investors are institutional investors who subscribe to an IPO before the issue opens to public. Usually, anchor investors invest in an issue a day before the opening of the IPO. They are required to bid for the shares within the price band for the IPO. Each anchor investor is required to invest a minimum of Rs 10 crore during the issue.

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The government is offloading 3.5 per cent stake or 22,13,74,920 shares in the insurer through the IPO. Stake of the government, which currently stands at 100 per cent, will be trimmed to 96.50 per cent after the IPO.

The allotment of shares will be done on May 12, 2022. Lot size of the IPO is 15 shares bidding for which one will have to spend Rs 14,235. A retail individual investor can apply for up to 14 lots or 210 shares by spending Rs 1,99,290.

The stock is likely to be listed on BSE and NSE on May 17.   

The firm has fixed Rs 2 lakh investment limit each for policyholders, employees, and retail investors' quotas. Employees will get a discount of Rs 45 per share. Retail investors and LIC policyholders will get a discount of Rs 45 per share during the IPO.

During the IPO, up to 15,81,249 shares and 2,21,37,492 shares will be reserved for employees and policyholders, respectively. Over 9.88 crore shares will be reserved for qualified institutional buyers and over 2.96 crore shares for non-institutional buyers.

KFin Technologies Limited is the registrar to the IPO.

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