LIC IPO - Anchor Placement Details

The anchor issue of Life Insurance Corporation (LIC) of India saw a robust response on 02nd May 2022 and the announcement was made early on Tuesday. The IPO opens on 04th May 2022 in the price band of Rs.902 to Rs.949 and shall remain open for 4 working days and close on 09th May 2022. Let us focus on the anchor allotment portion ahead of the IPO.

Before we go into the details of the actual anchor allotment, a quick word on the process of anchor placement. The anchor placement ahead of an IPO/FPO is different from a pre-IPO placement in that the anchor allocation has a lock-in period of just one month, although under the new rules, part of the anchor portion will be locked in for 3 months.

It is just to give confidence to investors that the issue is backed by large established institutions. However, the anchor investors cannot be allotted shares at a discount.

Anchor placement story of Life Insurance Corporation (LIC) of India

On 02nd May 2022, Life Insurance Corporation (LIC) of India completed the bidding for its anchor allocation. There was a tremendous response as the anchor investors participated through the process of book building.

A total of 5,92,96,853 (592.97 lakh shares approx.) shares were allotted to a total of 123 anchor investors comprising of 99 mutual funds registered with SEBI and 24 foreign portfolio investors (FPIs) and others registered with SEBI.

The allocation was done at the upper IPO price band of Rs.949 which resulted in an overall anchor allocation of Rs.5,627.27 crore.

Listed below are the 19 top anchor investors who have been allotted more than 1.50%  of the anchor allocation each in the IPO.

Out of the total anchor allocation of Rs.5,627.27 crore, these 19 major anchor investors accounted for 58.77% of overall anchor allocation.

No.	Anchor Investor	No. of Shares	% of Anchor Portion	Value Allocated
1	SBI Equity Hybrid Fund	5,468,910	9.22%	Rs.519.00 crore
2	BNP Investments LLC	4,741,830	8.00%	Rs.450.00 crore
3	Government Pension Fund (Norway)	2,370,915	4.00%	Rs.225.00 crore
4	ICICI Pru Value Discovery Fund	2,318,220	3.91%	Rs.220.00 crore
5	SBI Balanced Advantage Fund	2,160,165	3.64%	Rs.205.00 crore
6	HFDC Balanced Advantage Fund	2,107,485	3.55%	Rs.200.00 crore
7	SBI Blue Chip Fund	2,002,110	3.38%	Rs.190.00 crore
8	Government of Singapore	1,598,220	2.70%	Rs.151.67 crore
9	ICICI Pru Blue Chip Fund	1,264,500	2.13%	Rs.120.00 crore
10	ICICI Pru Balanced Advantage Fund	1,264,500	2.13%	Rs.120.00 crore
11	HDFC Hybrid Equity Fund	1,264,485	2.13%	Rs.120.00 crore
12	HDFC Flexi Cap Fund	1,053,750	1.78%	Rs.100.00 crore
13	ICICI Pru Equity and Debt Fund	1,053,735	1.78%	Rs.100.00 crore
14	ICICI Pru Life Insurance Company	1,053,735	1.78%	Rs.100.00 crore
15	HCL Corporation Private Limited	1,053,735	1.78%	Rs.100.00 crore
16	SBI Life Insurance Company Ltd	1,053,735	1.78%	Rs.100.00 crore
17	HDFC Top 100 Fund	1,053,735	1.78%	Rs.100.00 crore
18	SBI Flexi Cap Fund	979,980	1.65%	Rs.93.00 crore
19	Aditya Birla SL Frontline Equity Fund	975,930	1.65%	Rs.93.00 crore

 

_{Data Source: BSE Filings}

With stable signals coming from the GMP with premiums of about 8-9%, the anchor response has been 26.79% of the total issue size. The QIB portion in the IPO will be reduced to the extent of the anchor placement done above. Only the balance amount will be available for QIB allocation as part of the regular IPO.

The general norm is that, in anchor placements, smaller issues find it hard to get FPIs interested while larger issues do not interest mutual funds. Life Insurance Corporation (LIC) of India, due to its unique positioning in the Indian psyche, has got an extremely encouraging response from FPIs and domestic mutual funds.

Apart from the above list, some of the major Foreign Investors that put money in the anchor issue include, Monetary Authority of Singapore, Ghisallo Master Fund, Societe Generale, Sun Life, AG Dynamic Fund, Segantii India Mauritius and Saint Capital Fund.

Among the key domestic investors that invested in the anchor placement, apart from the list mentioned in the table were Axis Mutual Fund, Nippon India Fund, NPS Trust, Kotak Life, Tata Investment Corporation, Kotak MF, UTI MF, PNB MetLife Insurance, Sundaram Mutual Fund, Invesco India Fund, Tata Mutual Fund, Bajaj Allianz, Baroda BNP MF and IDFC MF. 

Out of the total 592.97 lakh shares allotted by way of anchor placement, Life Insurance Corporation (LIC) of India allotted a total of 421.74 lakh shares to 99 domestic mutual fund schemes across 15 AMCs. The mutual fund allocation represents 71.12% of the overall anchor allocation.

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