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LIC IPO: What GMP signals ahead of shares listing tomorrow

16 May , 2022   By : Kanchan Joshi

LIC IPO: What GMP signals ahead of shares listing tomorrow

Life Insurance Corporation of India (LIC) will list on the stock exchanges tomorrow, following the initial public offer (IPO) which was oversubscribed nearly three times the issue size. The government has fixed the issue price of LIC shares at Rs949 apiece, the upper end of the IPO price band, fetching the exchequer around Rs20,557 crore.

As per market observers, LIC shares continue to trade at a discount of Rs19 in the grey market today. The grey market discount indicates that the stock may have a moderate to discounted listing.

"The financial behemoth got a mixed response despite attractively priced valuations on account of subdued market conditions. The current sentiments indicates at par to discount listing, however, if market sentiments stabilises or improves till listing, we may see a positive impact. Hence, one should limit their expectations as far as listing gains are concerned," said Abhay Doshi, founder, UnlistedArena.

The initial share sale of the insurance behemoth closed on May 9 and shares were allocated to bidders on May 12. The government sold over 22.13 crore shares or 3.5% stake in the state-run insurer through the IPO at a price band of Rs902-949 a share.

The retail investors and eligible employees of LIC were offered a discount of Rs45 per equity share over the issue price, while policyholders got a discount of Rs60 per share. LIC policyholders and retail investors have got the shares at a price of Rs889 and Rs904 a piece, respectively.

The LIC IPO closed with nearly 3 times subscription, predominately lapped up by retail and institutional buyers, but foreign investor participation remained muted.

The government has diluted 3.5% stake in the life insurance firm through the Offer for Sale (OFS). It reduced the issue size from 5 percent decided earlier due to the choppy market conditions.

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