Big global players likely to anchor LIC IPO

The initial public offer would open on May 4 and close on May 9 as per plan now.

Most of the investment roadshows have been concluded and LIC is expected to receive final commitments from the global investment community, multiple sources with knowledge of the matter told ET. Anchor book is expected to be launched early next week, they said.

Unlike the usual names, global book running co-ordinators are banking on large US university endowments such as The Regents of the University of California or UC Investments, endowment funds of Harvard University, Massachusetts Institute of Technology and University of Notre Dame that are all looking at India equity bets.

University endowment funds typically belong to the class of investors with a long investment horizon. Typically, if participants participate, their investments account for 1-10% of the total anchor allocations.

Top Indian mutual funds including Aditya Birla, Axis, HDFC, ICICI Prudential, Kotak, SBI are likely to invest in the LIC IPO, industry sources said. Individual houses could not be contacted immediately for comments.

“After the reduction of valuation to Rs 6 lakh crore or less, we are now keen to put our money on the IPO,” said a head of a fund house.

LIC did not immediately reply to ET’s email seeking comment.

Investment bankers have completed the roadshows. LIC is now holding meetings with both international and onshore institutional investors seeking commitments for the anchor book, which would be 30 per cent of the issue size and expected to open on May 2.

Besides, Singapore’s GIC, Fidelity, HSBC are too expected to bet among others.

“Mostly, global sovereign and pension funds are likely to be part of the anchor book along with select local funds,” said a senior executive involved in the process.

LIC, which is hopeful of getting a one-off exemption on promoter dilution norms for its proposed public issue as the proposed issue size falls short of minimum requirements, is telling investors that the huge unserved market and the digital push provides it a longer runway to growth.

Local fund houses are not seeking any listing gains but will mark it for a long-term investment horizon. LIC investment is seen as a combination of “powerful and profitable.” Domestic book runners are also roping in wealthy Indian ultra HNIs and family offices to directly participate in the issue. “All large conglomerates, which run family investment offices betting on equities, are being approached,” said a market source.

Meanwhile, market regulator, Securities and Exchange Board of India is evaluating a proposal from the finance ministry seeking a one-time exemption from the regulations for the insurance giant, which will pave the way for launching the IPO in the first week of May.

Recently, UC investments picked 0.57 percent stake in Kotak Bank, while Harvard Endowment, which is headed by Indian origin Nirmal Narvekar, is also understood to be keen on the issue. Harvard Endowment is one of the largest in the world with $52 billion AUM. Canadian pension money managers, sovereign and pension money managers from the Europe, Middle East and South East Asia are among other key investors being tapped.