India’s third largest private sector life insurance company, HDFC Standard Life Insurance’s initial public offering got subscribed by 4.86 times at the end of last day of bidding, backed by strong demand from institutions. The near Rs 8,700 crore public offer saw total bids amounting to 1,06,80,78,500 shares as against the total issue of 21,97,59,218 shares. The QIB portion saw heavy demand as institutions bid for 88,59,30,200 shares as against 5,33,79,158 shares reserved for them implying subscription of 16.6 times. The Non Institutional Investors category saw the next highest demand with bids for 9,14,82,500 shares as against 4,00,34,328 shares amounting to 2.29 times subscription. The employee category too witnessed considerable demand with the total number of shares bid at 35,56,350 as against 29,49,520 shares reserved for them, implying subscription to the tune of 1.2 times.
The retail investor portion remained under subscribed and registered subdued demand at 8,01,31,300 shares against the total 9,34,13,431 shares reserved for them, implying 85% total subscription. The shareholder portion too saw muted demand at 85,91,350 shares versus 2,99,82,781 shares reserved for the category, amounting to subscription of 29%.
HDFC Life had expected to raise up to Rs 8,695 crore at the upper end of the price band through its share sale in a three-day bidding process which began on November 7th. The company had set a price band of Rs 275-290 for its IPO, in which HDFC and Standard Life offloaded 9.52% and 5.4% respectively. HDFC Life IPO is the first offering by HDFC group after 22 years. The public offer will closed today. The minimum bid size was set at 50 equity shares and in multiples of 50 shares thereafter.
There have been four other insurance IPOs in the year so far, including SBI Life Insurance, GIC Re, ICICI Lombard and New India Assurance. Notably, out of the four large insurers garnering Rs 35,000 crore in total, SBI Life Insurance and GIC are trading below their issue prices, ICICI Lombard is trading 2% above the offer price, while New India Assurance, which will list soon, is expected to witness a weak debut. HDFC Life IPO is priced at a slight premium compared to SBI Life and ICICI Prudential say brokerages, adding that the slight premium is justified, given its brand and underlying profit margins.