LIC places $1-bn bid for shares in NIA public issue
MUMBAI: The initial public offering (IPO) of state-owned New India Assurance Co. Ltd (NIA) was fully subscribed on the back of a $1 billion (around ₹6,500 crore) bid by Life Insurance Corp of India (LIC), said three people aware of the development.
The ₹9,600-crore NIA IPO was subscribed 1.04 times on Wednesday, the first day of the share sale. NIA’s IPO is the second largest this year after General Insurance Corp of India Ltd’s ₹11,372-crore share sale in October.
“LIC bid for shares worth ₹6,500 cr ore on the first day of the offering, resulting in an over subscription in the institutional portion of the offering. There were significant bids from other institutional investors,” said one of the persons cited above, requesting anonymity, as he is not authorised to speak with the media.
The portion of shares reserved for institutional investors in the NIA IPO saw a subscription of 2.13 times on Wednesday, while those reserved for retail investors and high net-worth in dividuals (HNIs) were subscribed 2% or (0.02 times) each.
At the end of the second day of the offering, on Thursday, The New India Assurance IPO was subscribed 1.07 times. The portion of shares reserved for institutional investors was subscribed 2.16 times, while those for retail and highnet-worth individuals were subscribed 5% and 4% respectively.
The insurance firm has set a price band of ₹770-800 for the IPO, which values it at ₹64,392-67,940 crore. The offer will close on November 3 and will see a total stake dilution of 14.13%.
An email sent on Wednesday evening to LIC enquiring about its bid was not answered.
This is the second straight state-owned enterprise IPO, in which the largest insurance firm in the country has made a substantial bid. Last month, Mint reported that LIC had bid for shares worth ₹7,000-8,000 crore in the GIC Re IPO.
The NIA IPO includes a fresh issue of ₹1,920 cr ore. NIA plans to use the proceeds from the fresh issue for augmenting its capital base to aid growth and expansion of business, improving solvency margin and solvency ratio.
The Centre, in an offer for sale, plans to sell 96 million shares, which at the upper end of the price band will fetch ₹7,680 cr ore.
NIA is the fourth insurance company to hit the primary markets with a public offering this year.