LIC sees strong demand from anchor investors

NEW DELHI: Life Insurance Corporation (LIC) of India’s initial public offering has received a robust response from institutional investors, with ₹5,620 crore worth of shares reserved for anchor investors getting fully subscribed, government officials aware of the details said.

Investors, including Norwegian wealth fund Norges Bank Investment Management and Singapore sovereign wealth fund GIC, were allocated shares of Life Insurance Corporation of India before the sale opens to the public on May 4, the officials said, requesting anonymity.

“The anchor book is to be allocated up to maximum allowable of up to about ₹5,620 crore, and it is fully done,” one of the two officials said.

Alongside global funds, domestic asset management companies such as HDFC Asset Management Co. Ltd, SBI Funds Management Ltd, ICICI Prudential Asset Management Co. Ltd and Kotak Asset Management Co. Ltd have also come in as anchor investors, a second official said.

The government expects to raise about ₹21,000 crore at the upper end of the price band in what would be India’s largest such sale.

Tuhin Kanta Pandey, secretary of the department of investment and public asset management (Dipam), told Mint earlier that book size from anchor investors is expected to be around ₹5,600 crore.

Queries sent to the spokesman for the finance ministry on Monday did not elicit a response as of press time.

The government will sell 3.5% of Life Insurance Corporation of India, or 221.3 million shares, of which 22 million shares will be reserved for policyholders and 1.5 million for employees of the insurance behemoth.

LIC is valued at ₹6 lakh crore, which is just 1.1 times its original embedded value of ₹5.39 lakh crore, according to the government’s revised estimates.

The government has set the price band for the initial share sale of state-run Life Insurance Corporation of India at ₹902949 a share, with a ₹60 discount for policyholders and ₹45 for employees. Retail investors, policyholders and employees will be able to invest ₹2 lakh each, and the categories will be mutually exclusive, Pandey had said, indicating that if an employee is a policyholder as well, he would be able to invest up to ₹6 lakh in the IPO. The IPO will open for subscription to the public from May 4 till May 9, and shares will be listed on exchanges on May 17.

Institutional investors who fail to get shares during the anchor allotment process can buy LIC shares from the qualified institutional buyers’ quota, which will offer shares worth at least ₹10,500 crore. Excluding reservations, the remaining shares will be allocated in the ratio of 50% to qualified institutional buyers (QIB), 35% to retail investors and 15% to noninstitutional investors.