The Japan Times - Indian insurance giant slumps after country's biggest-ever IPO

Prime Minister Narendra Modi's government raised $2.7 billion by selling 3.5 percent of Life Insurance Corporation of India as his administration seeks to privatise state assets to plug a gaping budget deficit.

But it was forced to cut back the offer from a planned five percent after markets turned volatile following Russia's invasion of Ukraine and China's Covid lockdowns.

The offer price of 949 rupees had valued LIC at $77 billion, but it opened Tuesday on Mumbai's exchange trading seven percent lower. The share price dropped to 9.4 percent down, before recovering slightly.

The muted debut could test the appetite of new shareholders for further flotations of nationalised companies as Modi seeks to sell off state assets to plug an estimated 16.6 trillion rupee ($213.5 billion) fiscal deficit.

The IPO saw enthusiastic participation from small investors and was oversubscribed nearly three times during the six-day application period.

But foreign investors have withdrawn a net 1.71 trillion rupees ($22 billion) from Indian equities so far this year, stock exchange data showed, as the US monetary policy tightening further roiled sentiment.

- Synonymous with life insurance -

Founded in 1956 by nationalising and combining more than 240 firms, LIC was for decades synonymous with life insurance in post-independence India, until the entry of private companies in 2000.

It continues to lead the pack with a 61 percent share of the market in India, with its army of 1.3 million "LIC agents" giving it huge reach, particularly in remote rural areas.

But LIC's market share has declined steadily in the face of competition from net-savvy private insurers offering specialised products.

The firm warned in its regulatory filing that "there can be no assurance that our corporation will not lose further market share" to private companies.

The IPO followed a years-long effort by bankers and bureaucrats to appraise the mammoth insurer and prepare it for listing.

LIC is also India's largest asset manager, with 39.55 trillion rupees under management as of September 30, including significant stakes in Indian blue chips such as Reliance and Infosys.

LIC's real estate assets include vast offices at prime urban Indian locations, including a 15-storey office in Chennai that was once the country's tallest building.

The firm is also believed to own a large collection of rare and valuable artwork that includes paintings by MF Husain -- known as the Pablo Picasso of India -- although the value of these holdings has not been made public.

S.Suzuki--JT