As per market observers, LIC shares are trading at a discount in the range of ₹8-15 in the grey market today, down from ₹85 premium (GMP) at the start of the month. The grey market discount indicates that LIC shares may have a moderate to discounted listing.
LIC's mega public offering closed with nearly 3 times subscription at the end of the six-day bidding period which ended on Monday, predominately lapped up by domestic retail and institutional buyers but foreign investor participation remained muted. The insurance behemoth had fixed the price band at ₹902-949 per equity share for the issue.
Investors are also concerned about LIC’s ability to keep market share as private insurers like HDFC Life Insurance Co. and SBI Life Insurance Co. expand. The private sector has been on an aggressive expansion spree during the pandemic, growing new individual policy premiums while LIC struggled.
The government has raised ₹20,500 crore from sale of 3.5% of its stake in the insurance behemoth. LIC reduced its IPO size from 5% to 3.5% due to the prevailing choppy market conditions, which was substantially lower than the earlier projection of about ₹60,000 crore.
The anchor investor portion of the insurance behemoth's initial share sale was oversubscribed last week, raising around ₹5,620 crore from anchor investors, ahead of its issue.
LIC was formed by merging and nationalising 245 private life insurance companies on September 1, 1956. As of December 2021, LIC had a market share of 61.6% in terms of premiums or GWP, 61.4% in terms of new business premium, 71.8% in terms of the number of individual policies issued, and 88.8% in terms of the number of group policies issued.