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LIC retail portion undersubscribed in $3.3 billion stake sale
Bids covered about 69% of the shares reserved for retail investors, while institutional demand was strong enough to expand the sale to 6.5% from an initial 2.5%.
India’s Life Insurance Corp., or LIC, stake sale finished with weaker retail participation than institutional demand, leaving the portion set aside for individual investors undersubscribed, according to data from BSE Ltd. reported by LiveMint Markets and other outlets.
The two-day offer-for-sale closed Wednesday, after the government increased the offering size to $3.3 billion. Retail bids covered about 69% of the shares reserved for individuals, with the retail category placing bids for about 57.1 million shares versus 82.2 million reserved.
Institutional demand earlier in the process was stronger, prompting the government to raise the stake on offer to 6.5% from the initially planned 2.5%. LIC shares closed slightly higher on Wednesday after falling nearly 9% in the prior session.
The government offered a 10-rupee discount for retail investors on the final allotment price, creating an arbitrage opportunity as LIC shares traded at nearly a 3% premium over the 382 rupee floor price. The stock is profitable and pays dividends, but has traded about 17% below its 2022 IPO price on a split-adjusted basis and has trailed the Nifty 50’s roughly 55% rise over the same period.