Through the IPO of the state-run LIC, India is expected to raise $2.7 billion from the sale of a 3.5% stake.
The $2.7 billion IPO of State-owned Life Insurance Corporation (LIC), India’s largest, is open to registrations from retail and institutional investors. another after strong demand from anchor investors led by domestic mutual funds.
Government of India is expected to increase the amount, only a third of its original goalby selling a 3.5% stake in the country’s leading insurer, giving it an initial value of $78.52 billion.
In the hours after the IPO was opened to retail subscribers, India’s stock exchanges fell as the country’s central bank announced a surprise increase. key policy rate.
The NSE Nifty 50 index was down 1.7% by 16,780 at 08:44 GMT, while the S&P BSE Sensex was down 1.6% to 56,058.
The Reserve Bank of India’s monetary policy committee raised the key lending rate by 40 basis points to 4.4%, citing persistent inflationary pressure in the economy.
Registration, which opens Wednesday and ends May 9, will offer employees and retail investors a discount of 45 rupees ($0.58) per share. LIC contract holders will receive a discount of 60 rupees ($0.78) per share.
The price range for the issue has been set from 902 rupees to 949 rupees ($11.79-12.41) per share.
After pre-booking for employees and policyholders, the remaining shares will be distributed at the rate of 50% to qualified institutional buyers, 35% to retail investors, and 15% to institutional investors. non-institutional investment.
The final IPO price will be determined after the subscription ends.
59.3 million shares for anchor investors were registered at 949 rupees ($12.41) each. Norwegian investment fund Norges Bank Investment Management and the Singapore government have joined the anchor book, along with a number of domestic mutual funds.
The government originally wanted to list the LIC for the financial year ending March 31, but chose to delay the sale after Russia invaded Ukraine and the U.S. Federal Reserve’s tightening of interest rates caused a Market trend.
The 66-year-old company dominates India’s insurance sector, with more than 280 million policies. It is the fifth largest insurer globally by premium collection in 2020, the latest year for which statistics are available.
Yesha Shah, head of equity research at Samco Securities, said that at the higher end of the issue price range, LIC stock is being offered at a “significant discount to its peers”. . “Given the attractive valuation, the downside from here seems limited. Furthermore, the fact that the discount has also been offered to retail investors is the cherry on the pie. “
