The Reserve Bank of India (RBI) has said that all scheduled commercial banks which have been designated to process the application for the initial public offering (IPO) of Life Insurance Corporation (LIC) of India will remain open on Sunday, May 8, 2022.
The RBI said in a press release that the Government of India, in order to facilitate bidding for the LIC IPO, has requested that all bank branches designated to process ASBA (Application Supported by Blocked Amount) applications to be kept open for public on May 8, 2022.
Similarly, stock exchanges have also been directed to accept bids received on Saturday and Sunday from 10am till 7pm.
The LIC IPO opened for subscription on May 4, and till the afternoon of May 7, it has been fully subscribed by retail investors as well as non-institutional buyers.
LIC has fixed the price band at Rs 902-949 per equity share for the issue. Considering the upper end of the price band (Rs 949), the issue is valued at 1.10x its embedded value (EV) as on September 30, 2021. Also, retail investors and LIC employees have been offered a discount of Rs 45 per share, while policyholders have got a discount of Rs 60 per share.
It is also to be noted that the LIC IPO is entirely through an offer-for-sale (OFS) of up to 221,374,920 equity shares of face value of Rs 10 each. This means that the entire proceeds of the share sale will go towards the seller (government), and not LIC. The government aims to generate about Rs 21,000 crore by diluting its 3.5 per cent stake in LIC.
At present, there are three listed players in the market – SBI Life, HDFC Life and ICICI Prudential Life, and they command a valuation in the range of 2.5x-4x to their EV. This makes the LIC IPO an attractive offer for investors. The offer seems more lucrative for policyholders as they get a discount of Rs 60 per share in the IPO bid. This is straightaway a discount of 6.32 per cent. Besides, there is also a provision of a discount of Rs.45 to LIC employees and retail investors. This translates into a discount of 4.74 per cent.