Well, off late we marked insurance sector IPO entering the capital market. ICICI Lombard broke the ice this year and was followed by SBI Life. Both these IPOs got average response and fared poorly post listing raising question about success of GIC Re IPO. The reason was very simple, earlier two IPOs were having a size of Rs. 5700 crore and Rs. 8386 crore where as GIC Re IPO is for Rs. 10662 to Rs. 11373 crore ( based on lower and upper price bands).
On valuation part too, while ICICI Lombard was priced at Rs. 661 and SBI Life at Rs. 700 for Rs. 10 face value, GIC Re is priced at Rs. 855 to Rs. 912 per share of Rs. 5 face value. Thus on valuation part, it topped all the IPOs that came in so far.
On fundamental part, no doubt GIC Re is having strong base, but the mega size and the higher valuation has marred the mood of retail and HNI investors. Surprisingly, while other two IPOs commanded some premiums in grey market at the time of IPOs, GIC Re is having discount in grey market with more sellers than buyers.
While previous two IPOs had no discount for retail, GIC Re is offering a discount of Rs. 45 per shre to retail investors. Despite this lollypop, investors are not keen to come forward as can be seen from the following data. Tepid response to this IPO is indicative from the following response from investors for last two days.
From the above data it is clear that only QIBs have helped this IPO to garner 90% subscription till second day of subscription, Issue is closing tomorrow, and the major response comes on the last day as has been seen in the past, but for this IPO chances of HNI and Retail quota remaining undersubscribed is very likely. This is because of poor reports from grey market for this IPO. Retail quota has garnered around 1.8 lakh applications as per information from collecting centers.
As per report, LIC has submitted bids for Rs. 8000 crore worth of shares. Thus, other QIBS too are not keen as it appears. In QIB quota, LIC has given a major response and other PSU bodies have come fore in support. To market this issue, merchant banker’s differed Anchor investor process to lure more application in QIB, but that gimmick also has not worked as seen from the above data. Let us see, how it fares Friday.