Retail investors flock to LIC’s IPO like never before

The previous record for India’s capital markets was the 2008 IPO of Anil Ambani’s Reliance Power listing that saw 4.8 million applications.

The mega IPO of LIC is opening a new chapter in Indian retail equity investing with the number of applications set to eventually cross 6 million, the highest ever, and a potential 42.6 million investors in the future. The unique Permanent Account Numbers linked to LIC policies totalled 42.6 million.

Applications have come in from across the country, with Maharashtra, Gujarat and Rajasthan, forming the lion’s share. Last year, the ₹1,514-crore IPO of Glenmark Life Sciences received more than 3.9 million applications, then the second-highest in India’s history after Reliance Power.

“The discount factor has evinced huge response from retail individuals,” said Suvajit Ray, executive vice president at IIFL Securities, which is also associated with the distribution of the offer. “Also, the potential of offshore investors coming at a later stage via secondary market route suggests a clear upside for individual investors.”

The IPO was subscribed 1.79 times so far. Policyholders’ bids outpaced all other segments by 5.04 times. The portions for employees and retail investors were subscribed 3.79 times and 1.59 times, respectively.

High net worth individuals and qualified institutional buyer portions drew bids of 1.24 times and 0.67 times, respectively.

Foreign portfolio interest is circumspect, but retail investment is likely to result in a successful closure of the IPO on Monday.

A lot size of 15 shares or multiples can be allocated to people under retail segments. An investor can invest up to ₹2 lakh per application. The total size of the retail allocation would be in the range of ₹8,000-9,000 crore.

A total of 92.9 million shares are on the offer for retail individuals, policyholders and employees. While individuals will be entitled to have a discount of ₹45 per share, it is at ₹60 for policyholders/employees. The price band is in the range of ₹902-949 a share.

Qualified institutional investors did not show up, reflecting the global uncertainties.

“It is a bit difficult to get FPI attention amid geopolitical uncertainties. We are still hopeful of fulfilling the investment limit on Monday,” said a person involved in the process.

However, select overseas investors (sovereign, retirement funds, and a few others), including Norges Bank, the Government of Singapore, Monetary Authority of Singapore, and BNP Investments, subscribed to the anchor book that raised nearly ₹5,600 crore.