The initial public offering of Life Insurance Corporation of India (LIC) has seen a strong start with the state-owned life insurer raising Rs 5,627 crore from large institutional investors. Over 5.92 crore equity shares have been allocated to anchor investors at Rs 949 a share, the upper end of the issue price band.
The Indian government is selling a 3.5 per cent stake in the country’s largest insurance company at a valuation of about Rs 6 lakh crore. The government had earlier planned to sell a 5 per cent stake in LIC and was expected to garner around Rs 60,000 crore. But due to volatile equity markets and geo-political tensions, the issue size was cut to Rs 20,557 crore. Despite the reduction in size, it will still be the largest issue to hit the Indian capital markets so far. The price band for the LIC IPO has been set at Rs 902 to Rs 949 a share.
The issue, which is an offer for sale of up to 22.13 crore equity shares by the government, will open for subscription on May 4 and close on May 9. Retail investors and eligible employees will get a discount of Rs 45 per equity share and policyholders will get a discount of Rs 60 per equity share.
Before any public issue opens for subscription, shares are allotted to large institutional investors, which form the anchor or base of the issue. Norwegian government’s sovereign wealth fund Government Pension Fund Global, Government of Singapore, Monetary Authority of Singapore and BNP Investments LLC are among the large foreign investors that have subscribed to the LIC anchor book, according to details filed with stock exchanges on Tuesday.
Of the over 5.92 crore equity shares that were allocated to anchor investors, over 4.21 crore shares amounting to 71.12 per cent of the total allocation to anchor investors, were to 15 domestic mutual funds through 99 schemes.
SBI Mutual Fund, ICICI Prudential MF, HDFC AMC, Axis Mutual Fund and Aditya Birla Sun Life AMC are among the domestic fund houses that have invested as anchor investors in the LIC IPO.