Anchor Investors are loving the LIC IPO, Should you propose to invest in it?

LIC IPO oversubscribed by anchor investors
Anchor investors have oversubscribed the LIC IPO

by 5paisa Research Team Last Updated: May 09, 2022 - 01:23 pm 29.3k Views
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India’s most awaited IPO is finally here, the insurance behemoth has shared the details of the IPO. It has given a public offer of 21,000 crore for 3.5% stake, valuing the company  at a whopping 6,00,000 crores.

LIC has given a price band for the Initial Public Offer (IPO) at ₹902 to ₹949 per equity share. The public offer starts on May 4 and will remain open for bidders till May 9.

While the offer will open for investors today, it opened for anchor investors two days ago. As per reports by the mint, it will announce an anchor book of ₹56 billion for India's largest public offering of ₹210 billion.

So, Now you may be wondering why the IPO is open before its due date to certain investors? Well, when a company comes with an IPO, it allots its shares to different categories of investors and one of them is Anchor investors, these are qualified institutional buyers which buy the shares in large quantities.

These biggies have deep pockets and therefore are offered the shares a day before the IPO opens and at a pre-specified price.

As per the reports, LIC’s IPO has been oversubscribed by the anchor investors due to the strong demand for it. Norges Bank Investment Management and GIC -- sovereign wealth funds of Norway and Singapore respectively -- are likely to have anchored the public issue.

A Strong demand by the Anchor investors is usually a good sign, as these anchor investors are large institutions that have qualified research teams with a good investment acumen and therefore their investment boost the confidence of retail investors.

Also, anchor investors have a lock in period of 30 days, which implies they cannot sell their shares till 30 days from the allotment day and having this lock in period stops any significant price drop in the shares of the company.

LIC has a huge chunk of the insurance industry, with more than 60% share in the market it is an undisputed king. But not all is well in its kingdom as it is being dethroned by private players with their low premiums and hassle free offerings. 

So what do you think? Our old school, sarkari LIC would be with you IPO ke sath bhi, IPO ke bad bhi? 

Apply for this blockbuster IPO of the year on 5 paisa, here  is the link:


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