LIC IPO: The country's largest IPO will open for anchor investors today, know everything from price band to discount

Posted on 2nd May 2022 by rohit kumar

The wait for the country's biggest IPO is about to end. LIC's IPO will open for investors on May 4. Earlier, it will be opened for anchor investors today i.e. on May 2. It is noteworthy that out of 22.13 crore shares being offered for sale, about 5.93 crore shares have been reserved for anchor investors. According to a report, 50 percent of the shares have been earmarked for Qualified Institutional Allocation (QIP), which also has anchor investors. Out of the shares reserved for the QIP, 35 percent will be reserved for anchor investors.

 

Interested in many big companies

 

Let us tell that the country's world's largest companies are interested in LIC's IPO and they want to invest in it. According to a report, the country's top five mutual fund houses State Bank of India (SBI), HDFC, Kotak Mahindra, Aditya Birla, and ICICI Prudential (ICICI) will be the anchor investors of LIC. Apart from this, Norwegian, Singapore, and Abu Dhabi sovereign wealth fund Norges Bank Investment Management, GIC Pte, and Abu Dhabi Investment Authority can invest in this LIC issue as anchor investors. SEBI has extended the lock-in period for anchor investors to 30 days for shares received by them. In such a situation, there is a possibility that LIC will get more investors. Apart from this, 70 lakh investors are expected to participate in it.

 

 

This big advantage from anchor investors

 

Let us tell you that the anchor investor i.e. the earliest investor of any IPO. Anchor investors invest in it before an initial public offering (IPO) opens to the general public. These are also called institutional investors. These include mutual funds, pensions, and insurance companies. When big anchor investors invest in a company's IPO, it affects the perception of the general public and its demand may increase. This also increases the chances of the IPO being successful. In such a situation, according to the trends that are being received based on reports, big anchor investors are willing to invest money in the IPO of the country's largest insurance company LIC and it can get big benefits.

 

Price reached Rs 90 in gray-market

 

The enthusiasm among investors about LIC's IPO can be gauged from the fact that before the issue opens, the share price has increased to Rs 90 in the gray market. On Monday it started from Rs 70 and reached Rs 90. If we look at the rise in this, the GMP was Rs 15 on 23rd April, which became Rs 25 on 26th April. After this, it had reached Rs 45 in the gray market on 28-29 April and has now increased further.

 

Plan to raise Rs 21000 crore

 

While officially announcing the launch date of the IPO and its Price Bank, Secretary, Department of Investment and Public Asset Management (DIPAM), Tuhin Kanta Pandey had told in the past that the government will hold a 100 percent stake in Life Insurance Corporation of India (LIC) and this IPO. Going to sell a 3.5 percent stake Earlier, there was a preparation to sell a five percent stake. According to DRHP, the government plans to raise Rs 21,000 through this IPO. Let us inform here that because of the situation arising out of the ongoing war between Russia and Ukraine, the government has reduced the size of the issue because of the condition of the stock market. However, even after this, it will be the biggest IPO in the history of the country so far.

 

so fixed share price

 

The insurance company has fixed its price band for the initial public offer (IPO) from Rs 902 to Rs 949 per share. According to DIPAM secretary Tuhinkant Pandey, the government has set a target of raising Rs 20,557.23 crore by selling 3.5 percent of its equity stake or 22.13 crore shares of LIC. This is much lower than the earlier estimate of around Rs 60,000 crore. The IPO will be purely an offer for sale. On the other hand, there are 1.58 million shares for employees while the policyholder reservation is 22.14 million shares.

 

Rs 60 off for policyholders

 

According to DRHP, a provision has also been made for a discount in share price for policyholders and employees in LIC's IPO. Policyholders will get a discount of Rs 60 per share, while retail and employees will get a discount of Rs 40. Half of the shares in this IPO are reserved for Qualified Institutional Buyers (QIBs), 15 percent will be reserved for non-institutional investors, while the rest will be reserved for retail investors. For this IPO, the government has also approved 20 percent FDI in the past.

 

The interest of 6.48 crore policyholders

 

On Thursday, DIPAM director Rahul Jain said that there is an overwhelming response to LIC's IPO. 6.48 Policyholders have shown great interest in buying the shares. For example, 6.48 crore policyholders have linked their PAN number with the policy details till the cut-off date (February 28, 2022). Please note that such policyholders who have updated their PAN card details in the policy details by February 28, can participate in LIC IPO through the reserved category. DIPAM Director said that any policyholder can invest up to Rs 2 lakh in the reserved category. One can also invest up to Rs 2 lakh in the retail category.

 

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