LIC IPO: Second day to subscribe to the issue post poor demand on Day 1; GMP falls to ₹65

• The insurance behemoth Life Insurance Corporation of India (LIC) witnessed tepid demand on the first day of issue as it was subscribed just 0.63 times.
• The government is looking to raise ₹21,000 crore by selling 22.13 crore shares or a 3.5% stake in the company, making it India’s biggest IPO yet.
• The grey market premium of the company’s stock fell to ₹65 from ₹85 earlier.

Today, May 5, is the second day to subscribe to the INR 21,000 crore IPO of the state-owned Life Insurance Corporation of India (LIC), which has seen 63% subscription on the first day.

For what was a long-awaited and hotly anticipated IPO, the issue has witnessed quite a tepid demand on the first day.

The government is looking to raise ₹21,000 crore by selling 22.13 crore shares or 3.5% stake in the life insurance behemoth – LIC is the fifth largest insurer in the world.
Shares of the company are currently commanding a grey market premium (GMP) of ₹65 per share, which fell from ₹85 earlier.

The LIC IPO has also received poor demand from foreign investors as very few showed up for anchor investments. On the positive side, domestic mutual funds compensated for the absence of FIIs.

LIC’s anchor book witnessed strong demand from 123 anchor investors including the majority of domestic mutual funds (over 90 mutual fund schemes) and few global marquee investors.

Most marquee foreign investors skipped the LIC IPO despite the government reportedly reaching out to the sovereign wealth and pension funds to be anchor investors.

Despite concerns, analysts bank on LIC’s large distribution channel

If you’re looking to invest in the IPO, here is what analysts are suggesting to IPO investors. Although analysts are concerned about losing market share they believe LIC’s large distribution channel will keep it at the top. They believe LIC is significantly lower valued than other listed private players despite being the dominant player.

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