Should you take a slice of the LIC IPO pie?

Securities and Exchange Board of India (SEBI) had given a nod to the initial public offering proposal of LIC last month.

While the price band of the issue is expected to be announced today, reports suggest that the offer will run between May 4 and May 9.

LIC’s management and investment bankers will likely embark on road shows in six cities across India where they will meet potential investors and analysts. The cities include Mumbai, New Delhi, Bengaluru, Ahmedabad, Rajkot, and Kolkata.

The government has nearly halved its fundraising goal for LIC's IPO to $3.9 billion, having had to cut its valuation estimates after feedback from investors.

Yet, analysts don’t expect the issue to see a blockbuster response from investors amid uncertain market conditions.

Gaurang Shah, Vice-President at Geojit Financial Services says he expect LIC IPO to sail through but not with whopping subscription numbers. He expects tp see decent demand for LIC IPO from HNIs and retail investors

Ajit Mishra of Religare Broking, too, expects the IPO to enjoy decent traction given its dominant market share in the insurance space.

Business Standard spoke to Ajit Mishra, VP-Research at Religare Broking.

According to a Business Standard report, most large global investors that the Centre was wooing for the initial public may give the issue a miss.

Earlier, the Centre had reached out to 180-200 large investors that included sovereign wealth funds, and those who make investment decisions based on environmental, social, and governance (ESG) track record.

These investors are learnt to have committed to consider investing in the insurer’s future offerings, based on its performance as a listed entity.

This comes as the Ukraine war dynamics have made foreign investors skittish. They now see currency risks and anticipate embargoes while considering investing in emerging markets. 

The US Federal Reserve’s hawkish stance has further made them choose a safe haven. But an impressive response from domestic investors and some foreign investors have made the government go ahead with the IPO. 

Analysts believe that it will lead to a fresh wave of investors entering the market.

The public issue is likely to reserve 35 percent of its offer for retail investors, 10 per cent for policyholders and 5 per cent for LIC employees. 

Going forward, the government will look at an additional stake dilution in LIC only after a year of the insurer’s listing.