Over Rs 30,000 cr funds blocked in LIC IPO could hit other offerings

The initial public offering (IPO) of Life Insurance Corporation (LIC) — India’s largest-ever for the domestic markets — will close on Monday. So far, the issue has attracted bids worth over Rs 30,000 crore and expectations are that the figure could top Rs 1 trillion. The IPO’s popularity, particularly among retail investors, could weigh on the subscription figures of three other issues that also close this week. As a lot of funds will be blocked in LIC’s IPO, the capital available to invest in other issues could be constrained, said industry players.

Besides LIC, logistics start-up Delhivery is another major IPO that closes this week. The Softbank-backed firm’s IPO is aiming to mop up Rs 5,235 crore. The other two IPOs are mutual fund distributor Prudent Corporate Advisory Services (Rs 536 crore) and Venus Pipes and Tubes (Rs 165 crore). The four IPOs are cumulatively looking to raise almost Rs 27,000 crore — in what is one of the highest-ever for a five-day period for the domestic primary market.

The amount could have been even higher as LIC and Delhivery have downsized their issues. Last year, the two busiest weeks for IPOs saw capital raising of about Rs 21,000 crore and Rs 13,000 crore.

“Those with limited investment corpus will be in a dilemma on where to invest. It is not always that a fast-growing start-up has to compete with a well-established traditional firm, which is a household name,” said an investment banker.

Industry players said the refund process for LIC’s IPO will complete on May 13 — the same day when Delhivery IPO closes. However, bankers on these two IPOs said it was “unlikely” that the refund will come before the closing of the Delhivery and Venus Pipes IPO. Prudent Advisory’s IPO closes a day earlier. As a result, some investors will have to be selective, they added.

Delhivery’s IPO will be a re-test of investors’ appetite for new-age tech firms. Last year, start-up listings by Zomato, PolicyBazaar and Nykaa were a roaring success. The party, however, ended with Paytm’s disastrous listing and the global tech selloff. A successful listing of Delhivery could once again pave the way for IPOs of those waiting in the wings, such as Pharmeasy and Oyo. Delhivery is largely a supply chain services company with key focus on technology.

A major portion of the bids in LIC’s IPO so far have come from local investors, mainly retail. The institutional investor portion has seen bids worth only Rs 2,500 crore, with foreign investors submitting negligible bids. LIC’s successful listing will be key to boost the government’s disinvestment drive and also ensure demand for the life insurance giant’s subsequent share sales.