The IPO of India’s biggest insurer, Life Insurance Corporation (LIC), has got off to a good start, with the $732 million of shares reserved for so-called anchor investors oversubscribed at the upper end of the price range, a banking source said.

The Indian government has said it expects to raise up to $2.74 billion, just a third of its original target, from selling a 3.5 per cent stake in LIC in the country’s biggest initial public offering (IPO).

Anchor investors are high-profile institutional investors that are allotted shares before the subscription opens for retail and other investors, and have to commit to holding their shares for a certain period after listing.

LIC’s offering is set to open for other investors on May 4 and will close on May 9. The indicative price range has been set at 902 to 949 rupees per share, with 56 billion rupees ($732 million) of shares set aside for anchor investors.

Norwegian wealth fund Norges Bank Investment Management and Singapore sovereign wealth fund GIC have subscribed to the anchor book, the source said.

Alongside other global funds, domestic mutual fund houses such as HDFC mutual fund, SBI, ICICI and Kotak have also come in as anchor investors, the source added. Abu Dhabi Investment Authority and Qatar investment authority had previously been in talks to be anchor investors, but it wasn’t immediately clear if they made bids.

India’s finance ministry did not immediately respond to an email seeking comment.

Over 20 investors had expressed interest in subscribing to the anchor book, two other banking sources said.

Foreign institutional investors had some concerns about LIC’s IPO, but global pension funds had shown “good interest,” LIC’s chairman said last week.

Meanwhile the state-owned insurance behemoth LIC has said that it will retain part of its stake in IDBI Bank to reap the benefits of the bancassurance channel.

Along with the government, Life Insurance Corporation (LIC) will also divest its stake in IDBI Bank, but may not exit completely, LIC Chairman M R Kumar said.

LIC is currently doing roadshows for its maiden public issue, which opens for subscription on May 4. The government for the past few years has been planning to sell its 45 per cent minority stake in IDBI Bank to strategic investors as part of its privatisation drive.

Last week, the Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey had said the IDBI Bank privatisation process was underway and that the quantum of the stake sale would be determined after the completion of the roadshow.

IDBI Bank became a subsidiary of LIC with effect from Jan. 21, 2019, following the acquisition of an additional 82,75,90,885 equity shares.

On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a Qualified Institutional Placement (QIP).

“Strictly speaking, we are below the threshold limit of management control but then, what government really means is that management control is to be given in such a way that a private entity picks up and runs the bank, and government in the process gets value out of that,” Kumar said.

He further said that “since LIC is also in the picture, my stand has always been very clear that we will also divest along with the government, but it may be 49 per cent. So, it will depend on how this whole transaction plays out and what kind of investors express interest”.

He further said LIC does not want to “hold a big stake” but some holding as it has been a win-win for both entities. IDBI Bank has been the strongest contributor to the bancassurance channel, he said, adding for the bancassurance arrangement to continue LIC may not require to hold the entire stake.

Bancassurance is an arrangement between a bank and an insurance company, allowing the latter to sell its products to the bank’s customers and others through the branch network.

In the last three years, the bank has gained a lot in terms of savings accounts, cash management, and premium collection, he said.

“Once you’ve seen the result of fee-based income coming out of this (arrangement), once the board has recognised that this fee-based income is going to grow, the bank would also like to have continuity in the relationship,” the chairman noted.

IDBI Bank has come out of the prompt corrective action framework in March 2021, subject to compliance with certain conditions and continuous monitoring.