Insurance giant LIC said on Tuesday it had raised just over Rs.5,627 billion from anchor investors led mostly by domestic institutions ahead of its mega initial public offering (IPO).
The stake held by Anchor Investors (AIs) (5,92,96,853 shares) was subscribed at Rs 949 per common share, the insurer said in a bourse filing early this morning.
Of the approximately 5.9 billion shares allocated to AIs, 4.2 billion shares (71.12 percent) were allocated through 99 programs in 15 domestic mutual 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 Rs 21,000 crore by diluting the 3.5 per cent stake in LIC, the largest IPO ever in the Indian market. The previous high fundraising was seen in Paytm’s IPO in 2021 at Rs 18,300 crore and Coal India in 2010 at Rs 15,200 crore.
The price range for LIC IPO is Rs 902-949 per share.
Policyholders receive a rebate of Rs 60 per share while retail investors and employees receive a rebate of Rs 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 set by international actuarial firm Milliman Advisors at approximately Rs 5.4 lakh crore as of September 30, 2021.
Based on investor feedback, the market value of State-owned LIC has been set at 1.1 times its embedded value or Rs 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 Rs 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 percent in terms of premiums or GWP, 61.4 percent in terms of new business premiums, 71.8 percent in terms of number of individual policies issued and 88.8 percent in terms of terms the number of group policies issued.