India’s LIC shares tumble on debut after disappointing, albeit record-breaking, IPO – Metro US

MUMBAI (Reuters) – Shares in Life Insurance Corp of India (LIC) slipped 5% in its market debut on Tuesday, a fresh setback for the state giant after its IPO that, while record-breaking, yielded far less for the government than initially thought.

The country’s biggest insurer and its biggest domestic financial investor was trading at around Rs.900 per share on Tuesday morning, compared to its IPO price of Rs.949, and valued it at around Rs.5.7 trillion, or $73 billion.

The fall in the share price is consistent with a plunge in the broader market since LIC’s IPO was opened for subscription on May 4th.

“We didn’t expect a big listing as markets were nervous, expect a rebound,” LIC chairman MR Kumar told reporters.

The government raised around Rs 205 billion or US$2.7 billion from the sale of a 3.5 per cent stake in LIC.

That compares to a fundraising target of around Rs 300 billion in April, which in turn was halved from previous expectations after investors balked at high valuation estimates. Original government estimates had valued LIC at around Rs 17 trillion.

Prime Minister Narendra Modi’s government had positioned the sale as the first and largest in a wave of privatizations aimed at boosting state coffers.

At one point on Tuesday, LIC shares plunged as much as 9% before halting losses.

“Sentiment is being hurt by the carnage in the broader market. Although there is some recovery today and yesterday, many stocks have corrected sharply since the recent high,” said Hemang Jani, senior group vice president at Motilal Oswal Financial Services.

LIC dominates India’s insurance sector with more than 280 million policies. The 66-year-old company was the fifth-largest global insurer by insurance premium collection in 2020, the most recent year for which statistics are available.

Investors were also concerned that LIC’s investment decisions, including those in loss-making state-owned companies, could be influenced by government demands.

(Reporting by Nupur Anand in Mumbai, Chris Thomas in Bengaluru and Aftab Ahmed in New Delhi; Editing by Edwina Gibbs)