MUMBAI (AFP) – Indian state-owned insurance giant Life Insurance Corporation of India (LIC) slumped on its market debut yesterday following the country’s biggest-ever initial public offering, closing nearly eight per cent below the IPO price.
Prime Minister Narendra Modi’s government raised USD2.7 billion by selling 3.5 per cent of LIC as his administration seeks to sell off state assets to bolster tattered public finances.
But it was forced to cut back the offer from a planned five per cent after markets turned volatile following Russia’s invasion of Ukraine and China’s COVID lockdowns.
The offer price of INR949 had valued LIC at USD77 billion, but the stock traded under pressure all day, closing 7.75 per cent lower at INR875.45 a share.
The muted debut could test market appetite as Modi seeks to privatise more shares in nationalised companies to plug an estimated INR16.6 trillion fiscal deficit.
Market analyst Arun Kejriwal said the slump on LIC’s first day of trading was a “learning” experience, adding that the government will have to do more to convince investors if it wants to sell more of its stake.
But the IPO saw enthusiastic participation from small investors – including many first-timers – and was oversubscribed nearly three times.
“I knew it won’t be a great listing but it doesn’t matter to me,” said 30-year-old Ayush, a recent market entrant, who was unbowed by the decrease in share price. “I bought the shares for the long-term.”
Global equities have been tumultuous for most of 2022. Foreign investors have withdrawn a net INR1.71 trillion from Indian markets so far this year, stock exchange data showed, as United States (US) monetary policy tightening further roiled sentiment.