LIC IPO: Govt raises Rs 20,560 crore as firm sets issue price at Rs 949

India raised Rs 20,560 crore ($2.7 billion) as its biggest ever initial public offering priced at the top of the range following strong demand from local investors and a last-minute dash by foreign funds.

Life Insurance Corporation of India shares have been priced at Rs 949 each, the state-run firm said in a prospectus filed Friday. LIC shares were offered at Rs 902 to Rs 949 apiece. Trading on the stock exchange is due to begin May 17.

Dubbed India’s “Aramco moment” in reference to Gulf oil giant Saudi Arabian Oil Co.’s $29.4 billion listing in 2019 — the world’s largest — the float of LIC has ended up resembling the Aramco IPO not just in scale but in its reliance on domestic investors after some foreign buyers deemed it too expensive. Foreign institutional investors stepped up their bids for the sale in the last hours before the close of subscription this week, shunning currency risks and global market uncertainties.

Besides smashing India’s record as the country’s biggest IPO, LIC’s offering is also the world’s fourth-biggest this year, according to data compiled by Bloomberg. LIC’s debut comes at a time when capital-market activities have significantly slowed globally as the war in Ukraine stokes market volatility and saps investor appetite.

Shares of LIC are trading at a discount of about Rs 30 to its IPO price in the so-called gray market, traders told Bloomberg News. The expectation for a strong debut by LIC’s shares is waning as the demand in the unregulated market, where investors bet on listing day gains, has come down over the last few days.

Retail investors and LIC policyholders were among the most enthusiastic for the offering, thanks to the discounts they were offered. The portion reserved for them was fully taken up days before the offering was closed. The anchor portion of the IPO drew in sovereign funds from Norway and Singapore while other foreign investors picked up pace only on the last day.

Overall, the LIC offer was oversubscribed by nearly three times. The money will help the government bridge a budget deficit that’s expected to widen as commodity prices soar across the world.

For the banks working on the IPO, the share sale might not give them large fees but offers glory in the league table rankings, Bloomberg News has reported.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor