LIC IPO: Life Insurance Corporation (LIC) raised Rs 5,627 crore from anchor investors on Monday, ahead of the launch of its initial public offering (IPO), which opens for investors tomorrow, May 4, 2022. About 59.3 million shares were allotted to anchor investors at Rs 949 each, the upper end of the price band for the LIC IPO, the company said on Tuesday. The IPO, India’s biggest, will close on May 9.
Society Generale, Government Pension Fund of Norway, Government of Singapore, Monetary Authority of Singapore, and BNP Investments, are among the foreign funds that are invested. Meanwhile, 71 per cent of the total allotment was made to domestic mutual funds (MFs), which shows a disclosure by the company.
About 42.17 million shares were allotted to 15 domestic mutual funds, including SBI, ICICI Prudential, HDFC, Aditya Birla, Axis, Nippon, and UTI. HCL Corporation, NPS Trust, PNB Metlife, and Bajaj Alliance General Insurance were some of the other anchor investors.
“Out of the total allocation of 59,296,853 equity shares to the anchor investors, 42,173,610 equity shares (71 per cent of the total allocation) were allocated to 15 domestic mutual funds through 99 schemes,” the company said.
SBI Mutual Fund subscribed to shares worth over Rs 1,000 crore via four different schemes while HDFC MF subscribed to shares worth over Rs 650 crore via ten different schemes. ICICI Prudential MF subscribed to shares worth over Rs 700 crore.
Singapore government’s sovereign wealth fund (GIC), subscribing to shares worth over Rs 400 crore and BNP Investments, subscribing to shares worth nearly Rs 450 crore, were among the foreign funds.
Market regulator Securities and Exchange Board of India last week notified relaxed rules for anchor investors, under which the lock-in period for shares allotted to anchor investors will remain 30 days until June 30 for issues exceeding Rs 10,000 crore.
Sebi had recently tightened the rules, stipulating that for public issues of a size less than Rs 10,000 crore and opening on or after April 1, half the shares allotted to anchor investors would be locked in for 90 days and the remaining would have a 30- day lock-in period. However, for public issues of more than Rs 10,000 crore, the new rule on anchor investors would only be effective from July 1. Before April 1, shares allotted to anchor investors in an IPO were subject to a 30-day lock-in.
The government aims to raise Rs 20,600 crore from investors through the IPO. Of the 221.37 million shares on offer, around 98.8 million are reserved for qualified institutional buyers, and 29.6 million are non-institutional buyers.
A little over 1.58 million shares are reserved for LIC employees and another 22.1 million for policyholders. While retail investors and employees will get a discount of Rs 45 per share, LIC policyholders will get a Rs 60 discount per share on the offer price.
According to market observers, LIC shares are available at a premium (GMP) of Rs 63 in the gray market today, down from Rs 75 yesterday. The share allotment is expected to happen on May 12 and the shares of the company will be listing on stock exchanges BSE and NSE on Tuesday, May 17, 2022.
“Given the under penetration of insurance and improving financialisation of savings, we expect LIC to maintain its market leadership position backed by robust business traction. We believe investors should subscribe to the IPO for the long term, as we are confident that the structural story for the life insurance industry remains intact as uncertainties during the pandemic have highlighted the benefits of life insurance,” said B Gopkumar, MD & CEO, Axis Securities.
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