It expects 7.5-10 million retail applicants for the IPO, in what could be the largest non-institutional participation in the history of Indian capital markets.
The average ticket size is expected to be Rs 30,000-40,000 per individual application, three people familiar with the matter told ET citing preliminary feedback from book runners and other market participants.
LIC of India declined to comment.
India has 73.8 million demat account holders, according to a government estimate. With the insurance behemoth reaching out to policyholders the number of total demat account holders is estimated to have surged to 80 million in the country by now. The IPO is likely to be launched by March-end.
“Investment bankers are moving aggressively to tap individual participation amid a good number of interests from them across the country,” a senior executive involved in the share sale said on condition of anonymity.
Investment bankers, local brokers and agents are driving concerted efforts to ensure maximum retail participation.
As of March 31 last year, there were about 1.35 million individual LIC agents across the country. The insurer has more than 114,000 employees.
“We experience tremendous exuberance coming from individuals living in remote districts of this country,” said Suvajit Ray, executive vice president at IIFL Securities. “LIC’s agent network is a key catalyst here in evincing investor interest with retail focused brokers, who are working with investment bankers of the IPO.”
All policies have to be linked to the PAN card before February 28. After that policyholders will have to open a demat account. They will be allotted in lots. A single lot may include seven shares of LIC of India.
A record 3.4 million demat accounts were opened in January and February may see a fresh record as all brokers are racing to get LIC policyholders on board, ET reported on February 11.
“Roadshows are likely to be concluded by February-end, after which LIC will have a clear idea of potential demand,” said one of the persons cited earlier.
Investment bankers have begun roadshows with a bunch of local and overseas investors, including Capital Group, Aberdeen Asset Management, California University Endowment, Abu Dhabi Investment Authority (ADIA) and Government of Singapore Investment Corp, ET reported on February 15.
A battery of ten banks – Axis Bank, Bank of America, Citigroup, Goldman Sachs, ICICI Securities, JM Financial, JP Morgan, Kotak Mahindra Mahindra Capital, Nomura, SBI Capital Markets – are managing the LIC IPO.
Last Sunday, the government filed a draft prospectus as it decided to sell 5% stake through the IPO.
The government, according to a UBS report, could raise $8.6 billion by selling a 5% stake at a listing valuation of $172 billion.
“At this scale, LIC would be the third-largest stock in India by market cap, and the 32nd largest by free float, ensuring an entry into mainstream indices like Nifty-50,” said UBS.
LIC owns more than 19% of all government bonds, of the Centre as well as states, making it bigger than the Reserve Bank of India and surpassed only by the commercial banking system.
