LIC Initial Public Offering (IPO)
Context:
• The Centre stated recently that it had reduced the size of the Life Insurance Corporation of India (LIC) Initial Public Offering (IPO) in light of the current ‘volatile market’ environment.
Background:
• The Union Government has fixed the price at ₹902 to ₹949 per equity share of LIC.
• Policyholders would receive a 60-percentage-point discount, while qualifying employees and retail investors would receive a 45-percentage-point reduction.
• In light of the current (volatile) environment, the government chose to reduce its shareholding in LIC from 5% to 3.5 percent.
• The Centre had no intentions to issue a follow-up public offer within the next year. SEBI had granted an exception, allowing for a smaller IPO size.
• According to market experts, the GMP (grey market premium) for the LIC IPO today is $20, down from $28 on Wednesday.
• They speculated that today’s drop in LIC IPO GMP could be due to negative market sentiments.
• They also stated that the LIC IPO will open in a week, implying that premium projection by the grey market, despite weakness in the secondary market, should be regarded as a positive indicator.
About:
• Because the LIC IPO GMP today is 20, the grey market anticipates a LIC IPO listing price of roughly 969, which is around 2% higher than the LIC IPO price band of 902 to 949 per equity share.
• GMP, on the other hand, is not the correct criterion for determining whether an IPO will perform well or not, according to stock market analysts.
• They said that the company’s financials provide concrete information about the company’s fundamentals.
Source: THE HINDU.
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