LIC debuts with historic IPO

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LIC debuts with historic IPO

Life Insurance Corporation (LIC) has debuted on Indian stock exchanges following the country’s largest IPO to date, raising INR205 billion (USD2.7 billion) for the government of India.

Cyril Amarchand Mangaldas acted as legal adviser to LIC and the selling shareholder, the President of India.

Apart from CAM, the book-running lead managers had Shardul Amarchand Mangaldas & Co as legal partners, while Duane Morris & Selvam provided international legal counsel.

Linklaters Singapore acted as international legal counsel to BofA Securities, Citigroup, Goldman Sachs, JP Morgan and Nomura.

Saraf and Partners advised the Department of Investment and Public Asset Management and Government of India as pre-IPO legal advisers. The firm advised on various policy and legislative changes required in relation to LIC’s IPO.

The team was led by partner Akshay Nagpal, supported by partners Akshay Jain and Murtaza Zoomkawala, and associate Nikhil Issar.

The subscription period, between 4 May to 9 May 2022, received strong demand from anchor investors led by domestic mutual funds.

The government intended to raise money by selling a 3.5% stake entirely through the offer for sale (OFS) route, of which 10% of the shares were reserved for LIC policyholders and 0.7% for LIC employees; 31.25% was reserved for retail investors.

The offering saw the highest participation on record from retail investors with an aggregate of about 7.9 million applications, along with the highest number of anchor investors and the largest bid in the anchor book. The book was covered 2.95 times.

The portion set aside for policyholders was subscribed 6.11 times, employees bid 4.39 times the allotted quota and retail investors 1.99 times. The reserved portion of qualified institutional buyers was bid 2.83 times and that of non-institutional investors 2.91 times.

Teams under the capital markets, general corporate and disputes practice at CAM advised on the transaction. The deal team also received guidance from the firm’s managing partner Cyril Shroff.

The government-owned company dates back 65 years and has a network of 1.3 million agents. It is the only life-insurance company with an extensive presence in rural and urban areas, operating through eight zonal and 113 divisional offices.

Despite the robust investor response, LIC shares fell by as much as 9.4% to INR860 per share on listing day, against their IPO price of INR949.