Domestic mutual funds invest Rs 4,002 crore in LIC IPO’s anchor quota

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Domestic mutual funds invested Rs 4,002.27 crore, accounting for 71.12 per cent of the total anchor book portion of the initial public offering (IPO) of Life Insurance Corporation (LIC). SBI Mutual Fund invested Rs 1,006.89 crore, becoming the largest investor in the anchor book quota.

Anchor investors

LIC mobilised a total of Rs 5,627 crore from anchor investors on Monday. Four equity schemes of SBI MF invested the amount with SBI Equity Hybrid Fund alone putting in Rs 518.99 crore, according to data available from exchanges.

Seven schemes of ICICI Prudential Mutual Fund invested Rs 725 crore in the LIC IPO. HDFC Mutual Fund was allocated shares worth Rs 525 crore. Aditya Birla Sun Life MF, Axis Mutual Fund, Kotak MF, L&T MF and Nippon India MF, among others, also invested in the anchor portion.

Foreign funds/corporates

Among foreign funds, BNP Investments LLC was allocated shares worth Rs 449.99 crore. Govt Pension Fund Global of Norway invested Rs 224.99 crore. Govt of Singapore invested Rs 151.67 crore and the Monetary Authority of Singapore put in R 38.32 crore.

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Among corporates, HCL Corporation invested Rs 99.99 crore and Tata Investment Corporation Rs 49.99 crore. NPS Trust also invested in the IPO.

ICICI Prudential Life Insurance was allocated Rs 99.99 crore worth shares, SBI Life Insurance Rs 99.99 crore and Kotak Mahindra Life Insurance Rs 50 crore. However, none of the public sector insurance companies figure in the investors list.

Price discovery

An anchor investor in an IPO is a qualified institutional buyer (QIB) like a foreign portfolio investor or mutual fund or insurance company which invests before the IPO is made available to the public as per Sebi regulations. As initial investors, they make the IPO process more attractive for investors and instill confidence in them. Anchor investors also aid in price discovery of the IPO.

Anchor investors who get guaranteed allotment a day before the IPO opens to the public are normally allocated 60 per cent of the QIB quota. Companies with a profitable track record can allocate 50 per cent of the IPO to QIBs. The demand in the anchor category is an indication of the success of the IPO, according to analysts.

The corporation has priced the IPO in the range of Rs 902-949 per share. It has offered a discount of Rs 60 for policyholders and Rs 45 for retail investors and employees. The issue will open for retail investors on May 4 — May 3 is a holiday on account of Eid. Investors can bid for a minimum of 15 shares and thereafter in multiples of 15 shares.

The size of the IPO was cut from Rs 65,000 crore to Rs 21,000 crore as the Russian invasion of Ukraine and sustained selling by foreign investors sent the stock markets into a tailspin.

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