Domestic investors corner 71% of LIC anchor book; LIC raises Rs 5,627 crore from anchor investors

Life Insurance Corporation of India (LIC) closed the anchor book of its initial pubic offer (IPO) on Tuesday after raising Rs 5,627 crore from mostly domestic investors, setting the stage for the issue that will run for the public from today to next Monday. More than 71% of the anchor book was allotted to 15 domestic mutual funds through 99 schemes, as demand from foreign investors remained subdued.

The anchor investor interest seemed on a par with or at best marginally higher than the issue size. But government sources said investor interest was encouraging and insisted that the anchor issue was oversubscribed. They said institutional investors indicated demand worth over Rs 9,400 crore “verbally” and added that this was “equal to the overall QIB portion or 50% of the total public offer net of reserved categories”.

A senior government official said, of the total institutional demand gauged till the closure of the anchor portion of the issue, investors who were comfortable with the 30-day lock-in period were selected for share allotment, adding that, the remaining investors may subscribe to the main QIB book when it is opened.

SBI Equity Hybrid Fund was allotted 9.22% of the anchor investor portion for Rs 519 crore, while SBI Balanced Advantage Fund was allotted 3.64%. ICICI Prudential Bluechip Fund got 2.13%, while HDFC Trustee Company was allotted 3.55% in the account of HDFC Balanced Advantage Fund and 2.13% under its Hybrid Equity Fund.

Most large mutual fund houses like Axis, Kotak and Nippon, too, subscribed to the IPO along with insurers like ICICI Prudential Life and SBI Life.

Norway’s state-owned pension fund, Singapore government funds, BNP Paribas LLC, and Societe Generale were among the top foreign investors that participated in the anchor book on Monday — with BNP Paribas picking up 8% of the entire anchor book, worth Rs 450 crore.

Government sources say foreign investors are a little wary because of India’s neutrality vis a vis the Russia-Ukraine war and the fear of sanctions to be imposed on the country by the West.

The anchor investors’ portion, which consisted of 59 million equity shares was subscribed at Rs 949 per equity share, the state-run insurer said in an early morning filing to exchanges on Tuesday.

The interest rate scenario and geopolitical concerns have made foreign investors jittery and has led to weak demand from these investors for Indian equities, experts said. So far this year, foreign portfolio investors have sold Indian equities worth $17.2 billion.

The price band of the public issue is set at Rs 902-949 per share, whereas policyholders and retail investors/employees will get a discount of Rs 65 and Rs 45, respectively.

Of the 221.3 million shares of the insurer offered for sale, around 59.3 million shares have been reserved for the anchor investors, while employees’ reservation 1.58 million and policyholders’ reservation is 22.14 million.

The government aims to raise Rs 20,557 crore by offloading 3.5% stake in the insurer, much lower than Rs 60,000 crore estimated in the Budget for FY22.

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