Nearly a million LIC IPO applications could be rejected due to glitches

Close to a million applications made by retail investors in the Rs 20,500-crore initial public offering (IPO) of Life Insurance Corporation of India (LIC) may get rejected due to technical glitches, said people in the know.

“LIC’s IPO has seen retail applications of about 7.34 million. Out of these only 6 million to 6.5 million could be considered valid,” said a person with the knowledge of the development.

The actual number of valid applications will be formally announced by LIC ahead of its listing.

To be sure, rejections due to technical glitches is common for IPOs. Last year, Zomato’s IPO had seen nearly 30 per cent of retail applications getting rejected.

Investment bankers said common reasons behind such rejections are issues at the applicant’s end such as multiple entry, error in UPI address, name and PAN mismatch and not acceptance of payment mandate. In some cases, bids could also get rejected due to issues at the remitter bank while processing the UPI payment process.

LIC’s IPO won’t be impacted due to the rejection of applications as the issue has seen nearly three times more demand than shares on offer.

LIC's IPO, which closed on Monday, has received bids of over nearly Rs 44,000 crore. Even if the IPO gets 6 million valid applications, it will still be the highest-ever for an IPO, surpassing the record of 4.8 million applications in Reliance Power IPO in 2008.

Meanwhile, the weakness in the secondary market has weighed on the grey market premium (GMP) of LIC. People in the know said the GMP has declined from a peak of Rs 105 to Rs 35 on Tuesday. LIC’s shares are likely to be priced at Rs 949 per share. Retail and policyholders will be allotted shares at Rs 905 and Rs 889 per share given the discount offered by the government.

Sebi-ibankers discuss disparity in payment timelines

Market regulator Sebi and investment banker’s industry body Association of Investment Bankers of India (AIBI) discussed the issue of disparity in payment timelines between retail and institutional investors in initial public offerings (IPO), said people in the know.

Currently, the qualified institutional buyers (QIB) and non-institutional investors (NII) get one or two extra days to make payments after submitting their bids. However, retail investors have to make immediate payments.

Sebi called a meeting with investment bankers to discuss shortening of IPO timelines and to ensure more parity in payment process, said two people in the know. The issue of imposing a pause on IPOs until the issue is addressed was also discussed. However, AIBI in a statement said public offerings will go on.

“AIBI confirms that the IPO will continue as per their respective scheduled timelines. AIBI wishes to iterate that Indian primary market processes are robust and healthy. The endeavour is to keep on improving in the overall interest of investors and issuers. AIBI is in discussion with Sebi to improve the processes and systems including reducing listing timelines to T+3,” said AIBI in a statement.

Currently, the IPO timeline is T+6, (T denotes last day of the IPO and 6 denotes number of working days). The market regulator has set a goal of cutting the existing timeline by half.