Insurance giant LIC said on Tuesday it had raised just over £5,627 billion from anchor investors led mostly by domestic institutions ahead of its mega initial public offering (IPO).
Anchor Investors (AIs) stake (5,92,96,853 shares) was subscribed at £949 per share, the insurer said in an IPO filed early this morning.
Of the approximately 5.9 billion shares allocated to AIs, 4.2 billion shares (71.12%) were allocated through 99 programs in 15 domestic investment funds, the filing said.
Investments were also made by some domestic insurance companies and pension funds. Some of the prominent names in this category were ICICI Prudential Life Insurance, SBI Life Insurance, Kotak Mahindra Life Insurance, PNB Metlife Insurance, SBI Pension Fund and UTI Retirement Solutions Pension Fund Scheme.
Foreign holdings included the Government of Singapore, Monetary Authority of Singapore, Government Pension Fund Global and BNP Investment LLP.
According to the prospectus, of the 22.13 billion shares offered for sale, 5.93 billion shares were reserved for anchor investors.
The government would raise 21,000 crore by diluting its 3.5% stake in LIC, the biggest IPO ever in the Indian market. Previously high fundraising was seen in Paytm’s IPO in 2021 at 18,300 crore and Coal India in 2010 at 15,200 crore.
The price range for LIC’s IPO is between £902 and £949 per share.
Policyholders receive a rebate of ₹60 per share, while retail investors and employees receive a rebate of ₹45 per share.
Of the total shares on offer, over 9.88 billion shares are reserved for qualified institutional buyers and over 2.96 billion shares are reserved for non-institutional buyers. Up to 15,81,249 shares and 2,21,37,492 shares are reserved for employees and policyholders.
LIC would be listed and traded on the exchanges on May 17th.
The embedded value of LIC, which is a measure of an insurance company’s consolidated shareholder value, has been determined by international actuarial firm Milliman Advisors to be approximately 5.4 lakh crore as of September 30, 2021.
Based on investor feedback, the market value of government-owned LIC has been set at 1.1 times its embedded value, or ₹6 lakh crore.
LIC was formed by the merger and nationalization of up to 245 private life insurance companies on 1st September 1956 with an initial capital of £5 crore.
The product portfolio includes 32 individual products (16 participating products and 16 non-participating products) and seven individual optional driver benefits. The insurer’s group product portfolio comprises 11 group products.
As of December 2021, LIC had a market share of 61.6% in terms of premiums or GWP, 61.4% in terms of new business premiums, 71.8% in terms of number of individual policies issued and 88.8% in terms of number issued by the group guidelines.
