Sovereign funds, HCL’s Nadar among anchor investors for LIC IPO
Two sovereign wealth funds, a Dubai-based financial services provider and a holding company for the multi-billion-dollar HCL Group have come as anchor investors for the initial public offering of state-owned Life Insurance Corp (LIC).
A bunch of mutual funds, insurance companies and pension funds in the country also invested in the LIC IPO, India’s biggest share sale.
Norwegian sovereign fund Government Pension Fund Global and Singapore’s GIC pitched in with Rs 225 crore and Rs 189 crore, respectively, as part of the anchor book that garnered Rs 5,627 crore on Monday.
The two sovereign funds are among the most active investors within their global peer group in Indian publicly listed companies.
Among others was Dubai-based portfolio investment firm BNP Investments LLC, which forked out Rs 450 crore, and HCL Corporation, a private holding firm of the tech major controlled by the Nadar family, which committed Rs 100 crore.
SBI Mutual Fund’s schemes were a key driver of domestic demand for the shares, committing over Rs 900 crore. If we take commitment of sister group firm SBI Life Insurance, the SBI group shelled out over Rs 1,000 crore in the anchor allotment itself.
LIC filed its draft documents with the capital markets regulator in February and got a green signal within a month, even as more than 50 other companies are awaiting an approval to go public.
The insurance behemoth, which also happens to be the largest asset manager in the country, is eyeing an issue worth Rs 21,000 crore, all via an offer for sale by the Indian government.
Given the anchor allotment, the size of the public issue now stands at around Rs 15,400 crore.
The issue would value it at a little over Rs 6 trillion ($79 billion), making it the fifth most valued company in India behind Reliance Industries, TCS, HDFC Bank and Infosys.
LIC has been providing life insurance in India for more than 65 years and is the largest player in the country. It has a 61.6% market share in terms of premiums and a 61.4% market share in terms of new business premium for the nine months ended December 31, 2021.
It has a 71.8% market share in terms of number of individual policies issued and an 88.8% market share in terms of number of group policies issued, as well as by the number of individual agents, which comprised 55% of all individual agents in India as of December 31, 2021.
LIC was formed by merging and nationalizing 245 private life insurance companies in India on September 1, 1956.
LIC is ranked fifth globally by life insurance premium and tenth globally in terms of total assets. It is the largest asset manager in India with AUM (comprising policyholders’ investment, shareholders’ investment and assets held to cover linked liabilities) of Rs 40.1 trillion on a standalone basis. This was more than 1.1 times the entire Indian mutual fund industry’s AUM and 17% of India’s estimated GDP for fiscal 2022.
Its investments in listed equities represented around 4% of the total market capitalisation of the NSE.