LIC, India’s Biggest IPO, Lists At Over 8% Discount In Tepid Debut

India’s biggest-ever IPO, state-owned insurance giant Life Insurance Corporation (LIC), listed its shares at a discount of over 8 per cent on the BSE and the NSE on Tuesday.

Indeed, on the BSE, LIC launched at Rs 867.20 per share, a discount of 8.62 per cent from its mega initial public offering (IPO) allotment price of Rs 949.

The insurance behemoth’s shares were last trading at policyholders cost, Rs 889 , a gain of about 2.5 per cent from its listing price and over 6 per cent lower than its issue price, as of 11.25 am Indian Standard Time (IST). The share rose to a high of Rs 920 in the morning trade.

PTI reported that Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), speaking at the LIC’s debut occasion at the BSE, said, “This is a momentous event. LIC IPO is in line with the Prime Minister’s vision. India is one of the most important emerging markets and it will be one of the fastest-growing economies in this decade.”

“LIC Act was amended for the listing of IPO. Given the unprecedented size of the IPO special measures have been taken. Special drives were carried out to spread awareness for the policyholders. People enthusiastically participated and 73 lakh applications were received a record, and possibly it is the largest in the world ever while 50 lakh demat accounts were opened since then,” he added.

On the NSE, LIC’s listing price was Rs 872, indicating a discount of 8.11 per cent from the issue price. According to the NSE, the stock was last down over 3.5 per cent, at about Rs 914.

“Though LIC listing has been below the issue price of Rs. 949, given the attractive valuations and stability in the markets, we expect some buying interest in the stock both from retail and intuitional investors,” said Hemang Jani, Head of Equity Strategy, Broking and Distribution, at Motilal Oswal Financial Services.

“Since large amount of money has been released post listing of LIC, part of this money could get diverted into equity markets,” he added.

Recently, financial markets have been whiplashed on stagflation worries as major central banks are poised on an aggressive interest rate hike path to combat multi-decade high inflation.

Emerging markets assets have taken a beating on foreign capital exodus driven by the dollar’s appeal on a general increase in flight-to-safety trades.

Despite wild gyrations in global financial markets, LIC’s IPO got an overwhelming response. The offer was oversubscribed nearly three times, led by policyholders who bid for over six times the shares on offer.

Indeed, India’s largest public issue to date — closed with nearly 3 times subscription, predominantly lapped up by retail and institutional buyers, but foreign investor participation remained muted.

The IPO was delayed from March due to market volatility and cut back by a third of the original target plan in the face of limited demand.

The listing comes as Indian equity benchmarks rose for a second consecutive session on Tuesday, while the rupee weakened to an all-time low.

LIC had fixed the issue price of its shares at Rs 949 apiece after a successful issue, which fetched Rs 20,557 crore to the government.

LIC policyholders and retail investors have got the shares at a price of Rs 889 and Rs 904 apiece, respectively, after taking into account the discount offered. 

The government sold over 22.13 crore shares or a 3.5 per cent stake in LIC through the IPO, a third of its original target plan. The price band of the issue was Rs 902-949 a share. However, shares were allocated to investors on May 12 at the upper end of the price band.