The anchor investor portion of Life Insurance Corporation of India‘s (LIC) initial public offering (IPO) which opened on Monday, May 2, has been oversubscribed due to strong demand. Norges Bank Investment Management and GIC — sovereign wealth funds of Norway and Singapore respectively — are likely to have anchored the public issue. Reflective of the huge investor interest in the initial public offer (IPO) of Life Insurance Corporation (LIC), the Rs 5,630 crore anchor book saw an overwhelming response and was oversubscribed, according to a report by CNBC TV18. The official data is not out yet. The company will likely notify it by evening.
LIC IPO Anchor Book: Share Price
Meanwhile, the LIC IPO opened for anchor investors today, likewise, for public subscription it will remain open from May 4-9. LIC, on course for its Rs 21,000 crore IPO, aims to raise up to Rs 5,630 crore at the upper end of the price band from anchors. The firm has reserved around 59.29 million shares for the anchor portion.
The issue is priced in the Rs 902-949 range. It is not immediately clear at what price the shares are going to be allotted to these anchor investors. But in cases of oversubscription usually it is allotted at the ceiling price of the band.
If the trend during anchor rounds is replicated in the public bidding that is set to open from May 4, the huge size of the issue will not be a problem for it to sail through. Most analysts also suggest subscribing to the issue.
LIC IPO: Who Have Made Commitments?
Domestic mutual funds including SBI, Aditya Birla, ICICI Prudential, HDFC and Kotak have made commitments of Rs 150-1,000 crore each for the public offer, according to a report.
Life Insurance Corporation (LIC) estimates up to 70 lakh retail applications, which is more than five times the average retail applications received for the Indian primary equity market issuances in the last financial year, the ET report added. It said half of the retail subscriptions are expected to come from the country’s western region, including Maharashtra, Gujarat and Rajasthan.
Norway’s Norges Bank Investment Management, Singapore’s GIC Pte, and Abu Dhabi Investment Authority have also committed to becoming anchor investors in the LIC IPO, according to a Bloomberg report. However, the official announcement is still awaited.
LIC IPO: Reserved Portions for Investors
In a first in the country, the company has reserved 10 per cent of its IPO shares to eligible policyholders. Qualified institutional buyers will have access to 50 per cent of the shares while retail investors will be able to bid for 35 per cent shares. The remaining is reserved for non-institutional buyers.
LIC IPO: Price Band for Investors
The price band of LIC IPO is set at Rs 902 to Rs 949 per equity share, with a Rs 60 discount for policyholders and Rs 45 discount for employees and retail investors.
LIC IPO Latest GMP
While the price band for the share sale has been set between Rs 902 and Rs 949 per share, according to market watchers, the insurance behemoth’s shares are available at a premium of Rs 75 in the grey market today (May 2).
Grey market is the unofficial platform where shares of those companies are traded which have announced their IPOs. However, as the name suggests, it is not a legal platform and any transaction conducted on it is done on the investor’s risk.
At the same time though, the grey market premium (GMP) of a company’s share does give an indication about the demand or popularity of a forthcoming IPO.
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