Sources told BS that the shares of the insurance giant are changing hands between ₹940 and ₹945 in the grey market as against its IPO price of ₹949 per share. Shares of LIC are expected to make their stock market debut on Tuesday.
"If grey market activity is to go by, the stock could list at a discount. However, individual investors would still end up making some gains. The break-even point for retail and policyholders, who have applied in the IPO, is ₹905 and ₹889, respectively. The Centre has offered a discount of ₹45 to retail investors and employees of LIC, while policyholders are offered a discount of ₹60 per share," explained the report.
What is Grey Market
The unofficial market wherein individuals buy or sell IPO shares and applications even before they are officially launched for trading on the stock exchange is known as the grey market. Being an unofficial over-the-counter market, it has no regulations surrounding it. The transactions in the grey market take place in the form of cash on a personal basis. Grey market is not backed by any of the third-party firms like SEBI, Stock Exchange or Brokers.
LIC's IPO, which closed on Monday, has received bids of over nearly ₹44,000 crore and over 70 lakh applications, the highest for any IPO in the domestic market, added the report. The IPO received a healthy response from investors and the offer was subscribed a total of 2.95 times.
The portion set aside for policyholders was been subscribed 6.11 times, while employees bid 4.39 times the allotted quota and retail investors 1.99 times, while the reserved portion of qualified institutional buyers has booked 2.83 times and that of non-institutional investors 2.91 times.
The government divested a 3.5 percent stake in LIC to garner ₹21,000 crore. The IPO was entirely an offer for sale (OFS) by the government and did not comprise any fresh issue of equity shares.
LIC is the largest life insurer in India with a market share of 61.4 percent in terms of new business premium (NBP). This is around 1.59 times of the total private life insurance sector and around 6.7 times the NBP for the second-largest player in the industry.
LIC is the largest Asset Manager in India with an asset under management (AUM) of ₹40.1 lakh crore which is 1.1 times more than the AUM of the Indian mutual fund industry.