Weak LIC Listing Due To Volatile Markets; Investors Should Hold On To Stock: DIPAM Secretary

Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey on Tuesday said the weak debut of the country's largest insurer LIC on the bourses was due to unpredictable market conditions and suggested investors to hold on to the stock for long-term value.

LIC on Tuesday listed its shares at a discount of 8.11 per cent at Rs 872 per share on NSE.

On BSE, the shares got listed at Rs 867.20 apiece, down 8.62 per cent over the issue price of Rs 949 a share.

LIC had fixed the issue price of its shares at Rs 949 apiece after a successful initial public offering, which fetched Rs 20,557 crore to the government.

“Nobody can predict the market. We have been saying that it should not be held for a particular day but for more than a day,” Pandey told reporters after the listing of shares.

In LIC's share-sale, which happened through an offer-for-sale route, retail investors and eligible employees were offered a discount of Rs 45 per equity share, and policyholders a discount of Rs 60 per equity share.

LIC policyholders and retail investors have got the shares at a price of Rs 889 and Rs 904 apiece, respectively, after taking into account the discount offered.

Pandey said there was some protection for retail investors and policyholders who got the shares at a discount price.

LIC Chairman M R Kumar said the response for the shares in the secondary market is going to be higher which will pull the prices up.       “The markets are also jittery. We were not expecting a very big jump.

“It (stock price) will pick up as we go along. I am sure a lot of people, especially the policyholders who have missed out on the allotment will pick up the shares (in the secondary market). I don't see any reason why it should be tepid for too long,” MR Kumar told reporters.

The government sold over 22.13 crore shares or a 3.5 per cent stake in LIC through the IPO.  The price range for the IPO, the largest in the country, was fixed at Rs 902-949 per equity share. The initial public offering of LIC was subscribed nearly three times.

Speaking about the IPO, Pandey said it was right-sized, considering the capital market environment, with the objective of not crowding out the capital supply.

He said the IPO received 73 lakh investor applications from all categories other than anchor investors. It received 10.85 lakh applications from first-time investors, of which, more than 7 lakh got allotment.

Close to 46 per cent of the investors were from the western part of the country, 44 per cent from north and south, 9 per cent from east and north-east saw 1 per cent participation, he said.

Foreign institutional investors (FII) bids were to the tune of Rs 2,291 crore in the main book and they also invested Rs 555 crore in the anchor book, Pandey said.

“This is the highest number of record bids in the history of the Indian capital market and possibly one of the largest in any IPO anywhere in the world as well. This was one of the greatest retail participation in an IPO ever,” he said.

The IPO was the third largest IPO globally in the year till date, he said, adding that the aggregate IPO in Europe was less than $3 billion during this year till date.

“It was an 'atma nirbhar' issue which got subscribed mainly domestically. This gives us a very-very optimistic view of the capital markets going forward,” Pandey noted.

When asked about the roadmap for LIC post listing of shares, Kumar said the insurer has already introduced a couple of non-participating and guarantee products in the last quarter of FY22 and now it plans to aggressively sell these products.

The insurer may also look at launching some new products.

“We would like to push the plans that guarantee returns and give good profitability margins. Participatory products have always been our strength and we will work on that strength and also get into other segments,” he said.

On digitization, Kumar said the state-owned insurer has good infrastructure on that front and it will soon have a separate digital marketing channel. It will also focus on the bancassurance channel for distribution of its policies.

On a question about losing market share, he said, “Market share is again a question of growth. If I grow faster than the insurance sector then I am going to get back the market share. My base is quite huge and even if I grow slightly slower and lose market share, it doesn't really matter.”

He said LIC's market share is 63 per cent and expects it to settle at the same level. “We are not going to lose (market share) any more. I think there is enough room for growth,” Kumar added.