LIC's OFS discount looks tempting, but triggers don't

On August 3, the Centre announced an OFS in LIC, with the issue set to open for non-retail investors August 4. The OFS comprised a base offer of 2.5% of LIC's paid-up equity, with an additional 4% greenshoe option, taking the total potential divestment to 6.5%.

Read more: LIC shares sink 9% as OFS opens at 11% discount. Here's all you need to know

The retail tranche of the two-day share sale will open for bids on Wednesday after the non-retail portion was subscribed more than three times on Tuesday, the first day of the issue.

Bids were placed for more than 940 million shares against the 284.6 million shares on the block, prompting the government to activate the green-shoe option.

"Retail investors in the LIC IPO, after considering dividends, are roughly at breakeven over a four-year period. I would evaluate it against embedded value, VNB (Value of new business) growth and private-sector peers not against the pre-OFS closing price.," he added. Analysts do not rule out a further OFS to comply with Sebi requirement on minimum public shareholding.

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