The draft red herring prospectus (DRHP) for the IPO of state-owned insurance major Life Insurance Corporation of India (LIC) has been filed with SEBI (Securities and Exchange Board of India) on February 13.
As per the filing, the government of India, which holds 100 percent share in the country’s biggest life insurer, is expected to offer 316 million equity shares for sale from the total of 6.32 billion shares. This offer will be purely an OFS (offer for sale) transaction.
Anchor Investor Portion
LIC may allocate up to 60 percent of the QIB Portion to anchor investors on a discretionary basis. Out of this, one third of the anchor investor portion shall be reserved for domestic mutual funds, subject to valid bids being received from domestic MFs at or above the Anchor Investor Allocation Price.
Also read: LIC IPO: Market cap of India’s biggest insurer likely to hit $293 billion after listing
As per the filing, if there is under-subscription for the anchor investor portion, the remaining equity shares shall be added to the Net QIB Portion.
There will be a locked-in period of 30 days from the date of allotment for the equity shares that will be allotted to the anchor investors.
The DRHP also sets the conditions for anchor investors, on the basis of which the shares will be allocated to them subject to there being 1) a maximum of two anchor investors, where allocation in the anchor investor portion is up to Rs 10 crore; 2) minimum of two and maximum of 15 anchor investors, where the allocation under the anchor investor portion is more than Rs 10 crore but up to Rs 250 crore subject to a minimum allotment of Rs 5 crore per anchor investor and 3) in case of allocation above Rs 250 crore under the anchor investor portion, a minimum of five and a maximum of 15 anchor investors for allocation up to Rs 250 crore, and an additional 10 anchor investors for every additional Rs 250 crore or part thereof will be permitted, subject to minimum allotment of Rs 5 crore per anchor investor.
The minimum bid amount for an anchor investor is fixed at Rs 10 crore.
In case of a MF, separate bids by individual schemes of a MF will be aggregated to determine the minimum application size of Rs 10 crore.
Bidding for anchor investors will open one working day before the bid/ offer opening date and allocation for them will be completed within the anchor investor bid / offer period.
Anchor investors will not be allowed to withdraw or lower the size of their bids at any stage after submission of the bid. If the offer price is greater than the anchor investor allocation price, the difference between the offer price and the anchor investor allocation price will be payable by the anchor investors on the pay-in date. In case the offer price is lower than the anchor investor allocation price, allotment to successful anchor investors will be at the higher price, i.e., the anchor investor offer price.
