LIC IPO: Govt plans to tap around 180 investors in mega roadshows

As many as nine virtual roadshows being held daily over 20-day period

For the road shows of Life Insurance Corporation of India’s (LIC’s) listing, the government will approach large investors who have not yet anchored any Indian initial public offering (IPO) and those who focus only on large public offerings, officials in the know said. The government is trying to connect with more than 180 investors.

As the government prepares for the biggest-ever public listing in India, virtual road shows with investors have started, officials said. The government through its battery of investment bankers will approach the sovereign wealth fund Qatar Investment Authority (QIA), which has not acted as an anchor investor in any Indian IPO, and US-based Sands Capital, Citadel, and Surveyor Capital, which focus only on mega public offerings globally, they added.

Investors have also been shortlisted on the basis of the “excellent” environmental, social, and governance (ESG) track record of LIC. Those to be specifically targeted on ESG grounds include Marshall Wace and Oaktree Capital, among others, officials said.

“These investors generally skip Indian IPOs because of the size and allotment quota, and they will be targeted this time due to the staggering size of LIC’s IPO,” said an official.

Reaching out to these investors is part of the road shows being conducted for the LIC IPO, which is going to be the one of the largest events for stock markets globally. About nine virtual road shows are being conducted daily with a group of investors as well as with some large investors individually, and their queries are being addressed, officials said.

The plan is to reach out to over 180 investors over the 20-day period. Four teams, comprising the LIC chairman and managing directors, and officials from the Department of Investment and Public Asset Management (DIPAM) and Department of Financial Services, have been created.

Interaction with investors such as UBS has already taken place, and others who will be reached out include Temasek, Abu Dhabi Investment Authority (ADIA), Canada Pension Plan Investment Board, among others.

On Sunday, LIC filed the draft red herring prospectus (DRHP) with the markets regulator. The government will sell 316 million shares of the insurer through an offer for sale.

The LIC IPO has seen strong investor interest. The roadshows have just started and interactions with investors will be queued. Large investors will be keen to participate as LIC is expected to be an index stock. The valuation is something that will be decided close to the IPO, based on the feedback from investors, said an investment banker.

The LIC IPO is likely to sail through easily. Institutional investment is going to be sizeable from sovereign funds and pension funds. There seems to be some interest from the US and the UK, said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services.

“On the domestic front, the big story will be retail investors, and the spurt in new demat accounts is suggestive of that. Also, insurance companies and other funds domestically who have an appetite for long-term investment may look to invest in the IPO. Further, many companies who have large treasuries, may also invest in the IPO," Parekh said.

Market share

LIC's share is growing in group annuities and single premium, among others, compared with private sector competitors. The insurer’s dominance continues in tier 2 and tier 3 cities, which private sector players have not been able to penetrate, officials said.

Twenty years after deregulation paved the way for private sector participation, the insurance giant dominated the life insurance sector in terms of gross weighted premiums (GWP), new business premiums (NBP), number of individual policies issued, and number of group policies issued as of FY21.

As of January 2022, LIC’s market share in NBP stood at 61.16 per cent, compared to 66.18 per cent in April 2021, thereby losing almost 500 basis points of market share to private life insurers since the beginning of the financial year.

LIC has traditionally been an agency-driven institution, with 1.33 million individual agents as of January 2022, which is more than 55 per cent of the total individual agents the life insurance industry has.