Mumbai/New Delhi : India’s largest initial public offering received bids for nearly three times the shares on offer, helping the government mobilize 21,000 crore by selling 3.5% in Life Insurance Corporation of India.
The IPO navigated turbulent markets that have been on a downtrend by the Reserve Bank of India since the out-of-turn rate hike in the markets, policy tightening by the US Federal Reserve, which closed the global sell-off in equities. Done. The Russian invasion of Ukraine also cast a shadow on the share sale, forcing the government to lower its fundraising targets and the insurer’s valuation.
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Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey said domestic investors were mainly responsible for the success of the IPO, as well as credited other investor categories.
The IPO was the most subscribed by policyholders, seeing the highest demand of 6.1 times the shares on offer with the share reserved for them. A small portion of the share sale reserved for employees of the insurer received bids for 4.4 times the shares on offer.
Shares reserved for institutional investors were subscribed 2.83 times on the last day, while those for high net worth individuals were subscribed 2.91 times.
Retail investors also responded favorably, with the retail segment witnessing over bidding 12,000 crore, or almost double the number of shares on offer. LIC shares will be listed on the stock exchange on May 17.
Deepam K Pandey said the share sale showed India’s capital markets and investors had the potential to pull off a big IPO like LIC, even as most foreign institutional investors (FIIs) largely stayed away.
“FIIs take their own call like all other investors. I think we should look at it from a positive perspective that this issue is an example of self-reliant India – India has pulled out a bigger issue. The interest of retail investors shows that we, our capital market and the capacity of the investors have increased to such an extent that we do not need to be completely dependent on FIIs to run the market. They are equally welcome and some have come, but it is true that mainly the issue has been raised domestically.”
Sanjay Malhotra, Secretary, Department of Financial Services, said the inflow of money from investors in LIC amid outflows of FII funds speaks volumes of LIC as a company.
Pandey further said that the long exercise for listing of LIC will not only deepen the capital market but will also facilitate a large number of investors holding shares of the publicly owned company.
Alok Pandey, joint secretary of DIPAM, said while the size of the issue was 21,000 crores, the actual income may be approx. 20,500 crore, after considering the exemptions given to retail investors.
Responding to a question whether LIC will be included in the market indices from day one as it was the biggest IPO in the stock markets or even in some foreign indices, Pandey said Will eventually be included in the indices, it will follow all the procedures and first meet the minimum requirements in terms of float and size.
Pandey said, the government has extended all possible help to the investors.
Pandey said the size of the IPO was decided keeping in mind the overall situation, and with geopolitical uncertainties, the investment pool gets reduced. Strong demand from policyholders and retail investors was in line with the trend seen in anchor subscriptions, where domestic institutional investors came out in strong support for LIC. LIC picked up on 2nd May 5,627 crore from anchor investors.
Domestic mutual funds accounted for 74 per cent of the shares offered in the anchor allocation, while foreign institutional investors largely stayed away, subscribing to just 17.7% of the anchor allocation. The mutual fund subscription was led by SBI Funds Management Pvt Ltd. Ltd., ICICI Prudential Asset Management Company Ltd. and HDFC Asset Management Company Ltd.