Global investors have evinced interest in the anchor issue of the proposed initial public offering (IPO) of the Life Insurance Corporation of India (LIC).

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Investors like BlackRock, Blackstone, Govt of Singapore Investment Corp, Abu Dhabi Investment Authority and Capital International are believed to have held preliminary discussions with the state-run insurer for anchor book allocations prior to the IPO, government and banking officials told Economic Times.

Although the finance ministry is yet to finalise the timeline for the LIC IPO, the department of investment and public asset management (Dipam) secretary Tuhin Kanta Pandey had earlier said the government may launch the share sale in the January-March quarter.

LIC, individual bankers and fund houses did not respond to queries on the development.

Anchor investors are marquee institutional investors like sovereign wealth funds and mutual funds which are allotted shares before the company’s IPO opens for subscription. This boosts demand for the soon-to-be-listed company as anchor investors are believed to conduct deep research before investing in the company.

An anchor book is the list of these institutional investors. An IPO backed by a strong anchor book tends to perform well in the market. Although talks with anchor investors are held well in advance, share allotment is done only a day before the IPO.

"The anchor allocation negotiations are going on. We are seeing good response and approaches were made with only quality institutions," a person aware of the matter told Economic Times.

According to the report, investment banks managing the issue will hold discussions with Canadian pension managers CPPIB and CDPQ, Brookfield, California University Endowment and Kuwait Investment Authority and other funds this week and the next.

The government has hired 10 book managers including Goldman Sachs, Citigroup, JP Morgan, Bank of America Securities, Nomura, JM Financial, Kotak Mahindra Capital, ICICI Securities, SBI Caps and Axis Capital to manage the share sale. These managers are reaching out to 100 global fund managers, private equity funds and sovereign and pension money managers, the report said.

The LIC IPO is touted to be the biggest ever public issue to hit Dalal Street. The government may dilute a 10 percent stake in the insurance behemoth, media reports have said. The IPO will value LIC at around $110 billion.

Sources

https://economictimes.indiatimes.com/markets/ipos/fpos/global-investors-queue-up-for-lic-ipo-anchor-book/articleshow/87920290.cms

https://www.moneycontrol.com/news/business/ipo/how-does-stock-price-behave-after-the-end-of-the-lock-in-period-for-ipo-anchor-investors-7369211.html

(Edited by : Thomas Abraham)