Most brokerages had advised their clients to subscribe to the offering with a long-term investment horizon.
The price band for the IPO was Rs 685 to Rs 700 per share. At the top-end, SBI Life was valued at Rs 70,000 crore, 12 times its price-to-book and 73 times its 2016-17 earnings. The offering was priced at 4.2 times its embedded value (EV) for 2016-17. Its closed peer ICICI Prudential Life currently trades at around 3.8 times its FY17 EV.
"While the valuation looks higher compared to other listed financial companies (like NBFCs and private banks), we believe premium valuations are justified," Motilal Oswal had said in a note. "Given that the current valuations are mature, investors can subscribe to the issue from a long-term perspective. However, it must be noted that insurance being a steady business, it may not attract major listing gains," added another note by Centrum.
Brokers said tepid grey market premiums discouraged many HNIs from applying in the IPO. According to brokers, the SBI Life shares were quoting a premium of less than five per cent in the grey market. Total HNI demand stood at less than Rs 800 crore.
The SBI Life IPO was an offer for sale by the State Bank of India (SBI) and BNP Paribas. SBI sold shares worth Rs 5,600 crore and BNP sold worth Rs 2,800 crore in the IPO. SBI Life's IPO was biggest since Coal India's rs 15,300-crore offering in October 2010.
JM Financial, Axis Capital, BNP Paribas, Citigroup, Deutsche Equities, ICICI Securities, Kotak Mahindra Capital and SBI Capital Markets
were the investment banks handling the IPO.