LIC IPO: Insurance giant's grey market premium jumps 5 times in 4 days

Life Insurance Corporation (LIC) is all set to launch what is going to be India's largest initial share sale on May 4. Ahead of the mega initial share sale, LIC is commanding a premium in the grey market — an unofficial market for unlisted securities.

Dealers said LIC's GMP or grey market premium stood has increased to Rs 45-70 from Rs 15 over the past few days.

"The much-awaited IPO of LIC after a lot of consideration in terms of timing and valuations is now ready to go on floors. The valuation seems to be favourable for the investors... It seems the government has worked a lot on the valuation part to lure investors," Abhay Doshi, Co-Founder of Unlisted Arena —a portal that tracks grey markets and deals in unlisted securities, told CNBCTV18.com.

Dinesh Gupta, Co-Founder of UnlistedZone — another firm that deals in unlisted shares, finds the LIC valuation attractive compared with its listed private players.

"The discount for retail and policyholders is awesome," he said.

Shares of the state-run life insurance behemoth will be available for bidding in a price band of Rs 902-949 apiece in multiples of 15 during the three-day-long subscription window, which will close on May 9.

LIC shares will be listed on bourses BSE and NSE on May 17.

"The financial behemoth is valued around 1.1 times its embedded value, which looks attractive compared to its listed private sector peers," said Doshi.

He is of the view that though it can be a challenging task for a PSU IPO of such magnitude, reasonable pricing and the discount to retail and policyholders should generate significant interest across investor categories.