The initial public offerings of state-owned insurer New India Assurance Co. Ltd and Mahindra Logistics Ltd were fully covered on Wednesday as investors continued to bet heavily in the stock markets.
The IPO of New India Assurance received bids for a little over 125.38 million shares for the 120 million shares on offer, stock-exchange data showed at the end of the first day of bidding. It has no anchor book.
The portion set aside for qualified institutional buyers received bids for 2.12 times the 58.2 million shares on offer. A sizeable portion of institutional demand is contributed by insurance behemoth Life Insurance Corporation (LIC) of India, besides state-run State Bank of India and Bank of Baroda, two people in the know told VCCircle.
Retail investors, whose bid value cannot exceed Rs 2 lakh per application, bid for just 2.5% of the shares reserved for them despite the Rs 30 per share discount offered to them.
Non-institutional investors, comprising high net-worth individuals and corporate bodies, bid for just 2% of the shares reserved for them. The portion for eligible employees, who also have been offered a discount, was subscribed 2.6%.
NIA’s IPO will raise Rs 9,600 crore ($1.5 billion) for a 14.56% stake dilution on a post-issue basis. The issue comprises a fresh issue of shares worth Rs 1,920 crore and an offer for sale of 96 million shares worth Rs 7,680 crore as part of the government’s divestment plan for 2017-18.
India’s biggest non-life insurance firm is seeking Rs 65,934.06 crore ($10.21 billion) in market valuation at the upper end of the Rs 770-800 price band for the issue.
The government will get three years from the date of listing to bring its stake to 75% or below to comply with the norms of minimum 25% public float. The government owns 100% of the insurer.
NIA had filed its draft prospectus for the IPO on 9 August . It received approval from the Securities and Exchange Board of India (SEBI) on 15 September.
Kotak Mahindra Capital, Axis Capital, IDFC Bank, Nomura Financial Advisory and Securities (India) and Yes Securities are financial advisers to the IPO.
NIA joins a growing list of Indian insurance firms—life and non-life—that are either going public or have already listed on the bourses.
Last month, state-owned reinsurance firm General Insurance Corporation of India (GIC Re) listed on the bourses in what was the second-biggest Indian IPO of all-time.
SBI Life Insurance Co Ltd listed on the exchanges in early October and ICICI Lombard General Insurance Co in late September.
HDFC Standard Life Insurance Co.’s IPO will open next week while Reliance General Insurance Co. has also filed for an offering.
ICICI Prudential Life Insurance became the first life insurer in India to go public last year.
Mahindra Logistics
Meanwhile, the IPO of Mahindra Logistics, which counts homegrown private equity firm Kedaara Capital as its backer, also achieved full subscription on the second day of the sale on Wednesday led by retail investors.
The offering of 13.57 million shares, excluding the anchor allotment, was subscribed about 1.33 times after receiving bids for 17.99 million shares, stock-exchange data showed.
Retail investors, whose bid value cannot exceed Rs 2 lakh per application, bid for 2.17 times the 6.72 million shares set aside for them. The portion reserved for qualified institutional buyers was subscribed 76.5%.
Non-institutional investors subscribed to 10.5% of the shares earmarked for them.
The IPO reached near the halfway mark on the first day of the sale on Tuesday.
Mahindra Logistics’ IPO of Rs 829.35 crore ($128 million) comprises entirely a sale of 19.33 million shares by parent Mahindra & Mahindra Ltd and Kedaara Capital.
The company is seeking Rs 3,051.98 crore ($470 million) valuation through the IPO. The IPO will result in nearly 27.2% stake dilution post-issue basis.
M&M, India’s largest utility vehicle maker, and Kedaara will each sell 9.66 million shares through the IPO. Mahindra Logistics is not selling any fresh shares and the proceeds will go to the selling shareholders.
After the issue, M&M’s stake in the logistics company will drop to about 58.77% from 72.36%. Kedaara’s stake will decline to 9.4% from about 23% it held through its investment arms Normandy Holdings and Kedaara AIF.
Kotak Mahindra Capital Co and Axis Capital are managing the IPO.
The company had filed its draft prospectus on 4 August. It received SEBI nod on 6 October.
