The Life Insurance Corporation of India logo outside the company's office in New Delhi. Photo: AFP / Nasir Kachroo / NurPhoto

India’s state-owned investor the Life Insurance Corporation started its initial share sale process on a bright note on Monday with a good response from anchor investors.

According to a late stock exchange disclosure made by the insurance giant, it had raised 56.27 billion rupees (US$730 million). The issue was priced in the range of 902-949 rupees, and the shares to anchor investors were sold at the upper price limit.

A total of 59.3 million shares were allotted to 123 investors, and 71% of the amount came from 15 domestic mutual funds. The top investors were SBI Mutual Fund (10 billion rupees), ICICI Prudential Mutual Fund (7 billion rupees) and HDFC Mutual Fund (6.5 billion rupees).

About 16 billion rupees came from overseas funds and the top investors were the Singapore government’s sovereign wealth fund GIC Pte (4 billion rupees) and BNP Investments (4.5 billion rupees).

According to the rules laid down by capital market watchdog the Securities and Exchange Board of India, an anchor investor in an initial public offering is a qualified institutional buyer like a foreign portfolio investor or mutual fund, or insurance company that invests before the shares are made available to the public.

As initial investors, they set the tone in instilling confidence among retail investors.

Life Insurance Corporation’s initial public offering will remain open from May 4 to May 9. Investors can bid for a minimum of 15 shares and thereafter in multiples of 15 shares.

The insurer is planning to raise a total of 210 billion rupees through the share sale, which will be the biggest sale in India’s corporate history. With 56.27 billion rupees already raised through anchor investors, it expects to raise the remaining sum from retail investors.

If it succeeds, the insurance giant will have a valuation of 6 trillion rupees ($78 billion) and will be India’s fifth most valuable firm.

The government now holds a 100% stake in Life Insurance Corporation and had initially planned to sell shares worth 650 billion rupees. However, it had to scale it down to 210 billion rupees because of market uncertainty caused by the Russia-Ukraine war and sustained selling by foreign investors.

The insurer has offered discounts to policyholders and employees and this is expected to attract a lot of first-time investors.

In February, the government filed a draft red herring prospectus stating it wanted to sell a 5% stake in the insurance giant. However, a fortnight ago the government decided to lower the issue size to 3.5%.

This share sale is expected to provide momentum to the Narendra Modi government’s disinvestment agenda. The government has pegged disinvestment receipts at 650 billion rupees for the current financial year, up from 135.31 billion rupees raised in the last fiscal year.