LIC IPO: Insurance behemoth raises over Rs 5,000 crore via anchor investors

The anchor investor share of Life Insurance Corporation of India’s (LIC) initial public offering (IPO) was fully subscribed on May 2, according to LIC. Domestic mutual funds (MFs) accounted for over 71% of the anchor book share, according to the filing.

The state-owned insurance company issued almost 59.3 million shares at Rs 949 each to 123 investors.

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An anchor investor in an IPO, as per Sebi regulations, is a qualified institutional buyer (QIB) such as a foreign portfolio investor, mutual fund, or insurance company that invests before the IPO is made accessible to the public. As early investors, they make the IPO process more appealing to investors and instil trust in them. Anchor investors also help in IPO price discovery.

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Anchor investors who receive guaranteed allotment a day before the IPO opens to the public typically receive 60% of the QIB quota. Companies with a profitable track record can devote 50% of their IPO proceeds to QIBs. Analysts believe that demand in the anchor category is an indicator of the IPO’s success.

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The government of Singapore, Government Pension Fund Global, BNP Investments LLC, Monetary Authority of Singapore, Societe Generale, Invesco India, and Saint Capital Fund were among the major investors in the anchor book.

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SBI Mutual Fund, ICICI Prudential, SBI Life Insurance, Aditya Birla Sun Life, Axis Mutual Fund, HDFC Trustee, Nippon Life, Kotak Mahindra Life Insurance, L&T Mutual Fund, Tata Investment Corporation, UTI Mutual Fund, Sundaram Mutual Fund, IDFC MF, and Bajaj Allianz General Insurance were among the domestic investors that expressed great interest in LIC.

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“Out of the total allocation, 4.21 crore equity shares (or 71.12% of total anchor book) were allocated to 15 domestic mutual funds through 99 schemes,” LIC said in its BSE filing on May 3.

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The offer will be accessible for subscription on May 4 (Wednesday), and the deadline to subscribe is May 9 (Monday). The price range for the offer is Rs 902-949 per equity share with a face value of Rs 10 each. 

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Shares will be allocated to successful bidders on May 12, and refunds will be paid to unsuccessful bidders’ accounts on May 13. The successful bidders’ shares will be credited to their Demat accounts by May 16, and the stock will begin trading on the exchanges on May 17.

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LIC, which is on track for a Rs 21,000 crore IPO, aims to raise up to Rs 5,630 crore from anchors at the upper end of the pricing bracket. The company has set aside about 59.29 million shares for the anchor part.

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The Securities and Exchange Board of India (Sebi) has approved the government’s plan to sell 3.5% of its stake in the insurer through an initial public offering (IPO).