LIC tagged to be the anchor investor for NABARD
LIC, the insurance corporation has been showering the the responsibility of anchor investor of NABARD for infrastructural bond sale. According to the documents, as an anchor investor , LIC will take up 30 percent, or Rs1500 crore, of the base size of NABARD's bond issue.
For the very first time, the country's biggest institutional holder of marketable securities, LIC is officially an anchor investor for an upcoming bond sale by the National Bank for Agricultural and Rural Development [NABARD], marking the first such occurrence in India's corporate debt market. Investments documents showed that LIC is the anchor investor for the Rs 5,000-crore infrastructure bond sale by NABARD on December 20.
Besides the base, the issuer also has a green shoe option of Rs 5,000 crore. As anchor investor, LIC will take up 30 percent or Rs 1,500 crore, of the base size of NABARD's bond issue.
As per debt capital market sources , while the insurance major routinely buys large portions of highly- rated bond issuances, this is the first time it is being officially listed as an anchor investor. At present , LIC holds around 22 percent share of the overall bond market and 4 percent of the total market capitalisation in Indian equities.
LIC had invested a little more than Rs 13,000 crore out of a Rs 20,000-crore bond sale by Reliance Industries in November. Anchor investors have to invest a minimum of Rs10 crore in the IPO. Mutual funds have the reservation of one-third portion in the anchor investor investor category. Anchor investors have the allocation of 30 percent of the total IPO.
NABARD's bonds are rated AAA by rating agencies ICRA and India Ratings and will mature on April 28,2034, as per showed documents.
ROLE OF ANCHOR INVESTORS IN AN IPO:
1-Anchor investors were introduced to financial markets in 2009 by SEBI.
2-They are allowed up to 60 percent of the issues' portion available for Qualified Institutional Bidders [QIB]. They have to buy the shares at a price fixed by the company.
3-The allotment price for anchor investors will be within the price band.
4- The company allots the shares at a fixed price to the anchor investors only a day before the IPO.
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