LIC raises Rs 5,627 cr from anchor investors led by domestic institutions

Insurance behemoth LIC on Tuesday said it has garnered a little over Rs 5,627 crore from anchor investors led primarily by domestic institutions ahead of its mega initial public offering (IPO).

Anchor Investors' (AIs) portion (5,92,96,853 equity shares) was subscribed at Rs 949 per equity share, the insurer said in an early morning filing to exchanges.

Out of the allocation of about 5.9 crore shares to AIs, 4.2 crore shares (71.12 per cent) were allocated to 15 domestic mutual funds through 99 schemes, the filing said.

Besides, investment was made by some domestic insurance companies and pension funds.

Some of the prominent names in this category included 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 participation included Government of Singapore, Monetary Authority of Singapore, Government Pension Fund Global and BNP Investment LLP.

As per the prospectus, out of the 22.13 crore shares offered for sale, 5.93 crore shares were reserved for anchor investors.

The government by diluting 3.5 per cent stake in LIC would raise Rs 21,000 crore, the biggest ever IPO in the Indian market.

The previous such high fundraising was seen in the IPO of Paytm in 2021 at Rs 18,300 crore and Coal India in 2010 at Rs 15,200 crore.

The price band for LIC IPO is Rs 902-949 per equity share.

Policyholders will get a discount of Rs 60 per equity share, while retail investors and employees will get a discount of Rs 45 on each share.

Of the total shares on offer, over 9.88 crore shares are reserved for qualified institutional buyers and over 2.96 crore shares for non-institutional buyers.

Up to 15,81,249 shares and 2,21,37,492 shares are reserved for employees and policyholders.

LIC would get listed and start trading on the stock exchanges on May 17.

LIC's embedded value, which is a measure of the consolidated shareholders' value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.

Based on investor feedback, the market value of government-owned LIC has been pegged at 1.1 times its embedded value or Rs 6 lakh crore.

LIC was formed by merging and nationalizing as many as 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore.

Its product portfolio comprises 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits.

The insurer's group product portfolio comprises 11 group products.

As of December 2021, LIC had a market share of 61.6 per cent in terms of premiums or GWP, 61.4 per cent in terms of new business premium, 71.8 per cent in terms of the number of individual policies issued, and 88.8 per cent in terms of the number of group policies issued.