Mumbai: The initial public offering (IPO) of state-owned The New India Assurance Co. Ltd (NIA) on Wednesday was fully subscribed on the back of a $1 billion (approximately Rs6,500 crore) bid by Life Insurance Corp. of India (LIC), said three people aware of the development.

The Rs9,600 crore NIA IPO was subscribed 1.04 times on Wednesday, the first day of the share sale. NIA’s IPO is the second largest this year after state-owned General Insurance Corp. of India Ltd’s Rs11,372 crore share sale in October.

“LIC bid for shares worth Rs6,500 crore on the first day of the offering, resulting in an oversubscription in the institutional portion of the offering. There were significant bids from other institutional investors too,” said one of the persons cited above, requesting anonymity, as he is not authorised to speak with the media.

The portion of shares reserved for institutional investors in the NIA IPO saw a subscription of 2.13 times on Wednesday, while those reserved for retail investors and high net-worth individuals (HNIs) were subscribed 2% or 0.02 time each.

The insurance firm has set a price band of Rs770-800 for the IPO, which values it at Rs64,392-67,940 crore. The offer will close on 3 November and will see a total stake dilution of 14.13%.

An email sent on Wednesday evening to LIC enquiring about its bid in the NIA initial share sale did not elicit any response.

This is the second straight state-owned enterprise IPO, in which the largest insurance firm in the country has made a substantial bid.

Last month, Mint reported that LIC had bid for shares worth Rs7,000-8,000 crore in the GIC Re IPO.

The NIA IPO includes a fresh issue of Rs1,920 crore. NIA plans to use the proceeds from the fresh issue for augmenting its capital base to support growth and expansion of business, improving solvency margin and solvency ratio.

The government, in an offer for sale, plans to sell a total of 96 million shares, which at the upper end of the price band will fetch Rs7,680 crore.

NIA’s initial share sale is part of the Union government’s divestment plan, under which the Department of Investment and Public Asset Management (DIPAM) plans to sell government stakes in several central public sector enterprises through various routes such as IPOs, offers for sale and strategic sales.