RBI asks ASBA designated bank branches to remain open on Sunday for LIC IPO

The Reserve Bank of India (RBI) has asked all Application Supported by Blocked Account (ASBA) designated bank branches to remain open on Sunday in order to facilitate bidding for the mega initial public offering of Life Insurance Corporation (LIC).

“The Government of India, in order to facilitate bidding for LIC IPO, has requested that all bank branches designated to process ASBA (Application Supported by Blocked Amount) applications may be kept open for public on May 8, 2022 (Sunday). The matter has been examined and it has been decided that banks may keep all their ASBA designated branches open on May 8, 2022 (Sunday) for the above purpose,” the RBI said in a circular.

ASBA is the mechanism through which investors apply for shares in a public issue.

LIC’s IPO will remain open for subscription even on the weekend, given the large amount the government is looking to raise from the market.

The LIC IPO, which opened for subscription on Wednesday, was subscribed 67 per cent, or 0.67 times, at the end of Day 1, driven by robust interest from its policyholders, employees, and the retail segment. The issue will remain open till May 9.

The latest data shows, the IPO has been subscribed 73 per cent, with policyholder’s segment subscribed 2.2 times, employees segment subscribed 1.39 times, and retail portion subscribed 0.67 times.

The insurance behemoth on Monday raised Rs 5,627 crore from anchor investors ahead of its IPO, with 71 per cent of the amount coming from domestic mutual funds (MFs). In total, the state-owned insurance giant allotted nearly 59.3 million shares to 123 investors at Rs 949 apiece, with 42.17 million shares allotted to 15 domestic mutual funds through 99 schemes.

The government is looking to raise Rs 20,557 crore by diluting a 3.5 per cent stake in the insurer, making it the biggest public offering of the Indian capital market. Initially, the government was looking to dilute 5 per cent in the insurer, but given the volatile market conditions due to geopolitical tensions, it decided to reduce the equity dilution.

LIC has been valued at 1.1 times its embedded value of Rs 5.39 trillion. Post listing, it could have a market cap of Rs 6 trillion, making it one of the most valuable firms in the country.

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