Shares of Life Insurance Corporation (LIC), which came out with a Rs 21,000 crore IPO recently, fell by 5.85 per cent to Rs 668.20 on the stock exchanges on Monday as anchor investors unloaded the shares after the lock-in period ended.
With this, the stock has fallen 29.58 per cent from the IPO offer price of Rs 949, indicating that investors have lost nearly one third of their investment in the LIC IPO as on Monday. The market capitalisation of the stock has also fallen to Rs 4.22 lakh crore.
LIC mobilised Rs 5,627 crore from anchor investors. Domestic mutual funds invested Rs 4,002.27 crore, accounting for 71.12 per cent of the total anchor book portion of the LIC IPO. SBI Mutual Fund invested Rs 1,006.89 crore, becoming the largest investor in the anchor book quota.
Four equity schemes of SBI MF invested the amount with SBI Equity Hybrid Fund alone putting 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.
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.
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.
The corporation offered a discount of Rs 60 for policyholders and Rs 45 for retail investors and employees. 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.