Shares of the state-owned Life Insurance Corporation of India (LIC) were set to open at an 8% discount from their IPO price on Tuesday. In pre-open trade, LIC shares were trading at 872 rupees, compared to the offer price of INR 949. This valued the company at ₹5.7 trillion (INR) or $73 billion (USD). Since the LIC IPO opened for subscription on May 4, the share price has fallen in line with the overall market, as much as 9% before paring losses.
The global and local market sell-offs, central bank interest rate hikes, and growing inflationary figures, as well as a continuous global conflict, have dimmed the excitement surrounding the listing of major IPOs.
The government raised around 205 billion rupees ($2.7 billion) via the sale of a 3.5 percent interest in LIC. This compared to a fundraising target of roughly 300 billion rupees in April, which was cut from early forecasts after investors balked at the extraordinarily high-value assumptions. According to initial official estimates, LIC is worth roughly 17 trillion rupees.
The transaction was marketed as the first and largest in a series of privatizations aimed at restoring state coffers by Prime Minister Narendra Modi’s administration. Thus, investors have also expressed worry that LIC’s investment selections, notably those in loss-making state enterprises, may be affected by government demands.
With over 280 million policies, LIC dominates India’s insurance business. In 2020, the most recent year for which figures are available, the 66-year-old corporation was the fifth-largest worldwide insurer in terms of insurance premium collection. The LIC IPO was approximately three times oversubscribed, owing to the excitement of policyholders who received a ₹60 discount with repeated bids for the shares on sale.
Macquarie began coverage on LIC with a ‘neutral’ rating and a ₹1,000 per share objective. The shares of LIC have been listed on the Bombay Stock Exchange and the National Stock Exchange in India.
