Shares of Life Insurance Corporation (LIC), which was recently issued with a value of Rs 21,000 crore for public offering, fell 5.85 per cent to Rs 668.20 on the stock exchanges on Monday as core investors dumped shares after the close period ended.
In doing so, the stock fell 29.58 per cent from its IPO price of Rs 949, indicating that investors lost nearly a third of their investment in Monday’s initial public offering. The market capitalization of the share also fell to Rs 4.22 crore.
LIC has mobilized Rs 5,627 crore from major investors. Local mutual funds invested Rs 4,002.27 crore, which represented 71.12 per cent of the total core portion of LIC’s initial public offering. The SBI mutual fund invested Rs 1,006.89 crore, becoming the largest investor in the underlying book stake.
Four SBI MF equity schemes have invested the amount with the SBI Equity Hybrid Fund alone worth Rs 518.99 crore, according to data available from stock exchanges. Seven schemes of ICICI Prudential Mutual Fund have invested Rs 725 crore in LIC IPO. The HDFC Mutual Fund has been allocated shares of Rs 525 crore. Aditya Birla Sun Life MF, Axis Mutual Fund, Kotak MF, L&T MF and Nippon India MF, among others, have also invested in the core portion.
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Rs 99.99 crore life insurance from ICICI, Rs 99.99 crore life insurance from SBI, and Kotak Mahindra Life Insurance Rs 50 crore. However, none of the public sector insurance companies were included in the list of investors.
The primary investor in an IPO is a qualified institutional buyer (the bank) such as a foreign portfolio investor, mutual fund, or insurance company that invests prior to an IPO in accordance with SEBI regulations. As seed investors, they make the IPO process more attractive to investors and instill confidence in them. Fundamental investors also help discover IPO prices.
The company offered a discount of Rs 60 to policyholders and Rs 45 to retail investors and employees. The size of the initial public offering was reduced from Rs.65,000 crore to Rs.21,000 crore as the Russian invasion of Ukraine and continued selling by foreign investors deteriorated stock markets.