India to Trim Mega Insurer IPO Size, Issue Opens Next Week
The initial public offering will be priced in 902 rupees ($11.771) to 949 rupees band and opens next week.
(Bloomberg) -- India slashed the size of its biggest initial public offering by about 60%, pressing ahead with the sale even as the war in Ukraine continues to weigh on investor demand.
Prime Minister Narendra Modi’s government will sell 221.4 million shares of Life Insurance Corporation of India at 902 rupees to 949 rupees each, according to the final prospectus filed with exchanges, confirming an earlier Bloomberg News report. The offering next week could raise as much as 210 billion rupees ($2.7 billion) at the top end of the price range. That’s far lower than the 500 billion rupees targeted earlier, people with knowledge of the matter said at the time.
Even so, the IPO will be India’s largest, surpassing the 183 billion rupee sale by One97 Communications Ltd., the operator of Paytm, in November. A successful listing would need demand from both global and local funds, in a year when foreign investors have withdrawn $19 billion from Indian stock markets. The money will help bridge the country’s budget deficit, which risks becoming wider as fuel costs surge.
Key Details:
- Government will sell 3.5% stake in state-run LIC, down from 5% planned earlier
- Offer opens for anchor investors May 2, runs May 4-9 for other buyers
- About 10% will be reserved for LIC policyholders who will also get a discount of 60 rupees on the IPO issue price
- Retail investors to get a discount of 45 rupees
| For the latest on LIC’s IPO, read: |
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Given the current market conditions, the valuation is “fair and attractive” and will attract millions to participate in the issue, Tuhin Kanta Pandey, secretary at the divestment department in the finance ministry, said. “We wanted to do it in March but we waited. Optimal time depends upon the situation you are in,” Pandey said referring to the scaled-down size.
The sale, a mere shadow of what had previously been touted as India’s Aramco moment in reference to Gulf oil giant Saudi Arabian Oil Co.’s $29.4 billion listing in 2019 will test the depth of India’s capital markets.
Firms in India have raised about $1.1 billion through IPOs this year, data compiled by Bloomberg show. That’s less than half of the nearly $3 billion raised in the same period in 2021.
LIC is a household name in India. With 2,000 branches, more than 100,000 employees and about 286 million policies, the Mumbai-headquartered company reaches practically every corner of the country. The 65-year-old firm has almost $500 billion in assets, 250 million policy holders and makes up almost two-thirds of the market.
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