LIC market debut lacklustre after record IPO: 10 points

India’s insurance behemoth – the Life Insurance Corporation or LIC – made a weak market debut on Tuesday after a record-breaking IPO last week. The shares in the state-owned insurance giant slid to as much as 9.4 per cent to 860 rupees in Mumbai against the issue price of ₹949 in the first hour of trading, according to a Bloomberg report. Last week, by selling about 3.5 per cent stake- at the top of the range – of the country’s top insurer, the government raised $2.7 billion or ₹20,557 crore. But volatility in the global market has arguably cast a shadow on the Dalal Street debut, according to analysts.

Here are ten points on the LIC market debut:

1. An executive of the firm was quoted as saying by news agency Reuters that the LIC “should be able to settle our market share at 62-63% of the insurance market”. “Going forward, we would look to push the guaranteed return plan products to improve margin,” the executive said.

2. Riding on the enthusiasm of the policyholders, who got a ₹60 discount with multiple bids for the shares on offer, the LIC IPO was oversubscribed nearly three times. LIC policyholders and retail investors had got the shares at a price of ₹889 and ₹904 apiece.

3. Despite criticism from the opposition, the government had decided to push ahead with the IPO despite a slowdown in global fundraising amid the Ukraine war and decreased appetite among foreign investors. Over 22.13 crore shares have been sold by the government with the IPO, according to a PTI report..

4. While foreign investment participation has been largely amiss, the IPO was said to have been lapped up by retail and institutional buyers. 

5. The LIC IPO – the country’s largest till date – was described as ‘India’s Aramco moment’ by many. Saudi Arabia’s state-oil giant Aramco raised $25 billion in 2019 in the world’s biggest IPO, surpassing Alibaba’s record.

6. The latest Ernst and Young report has said that the Indian IPO market witnessed a significant slowdown this year in the first quarter.

7. Geopolitical tensions, stock market volatility, a price correction in overvalued stocks from recent IPOs, plus concerns about rising commodity and energy prices, and slower economic growth are believed to be factors behind the slowdown.

8. The LIC shares have listed on the Bombay Stock Exchange and the National Stock Exchange.

9. Earlier, the amount mobilised from the Paytm IPO in 2021 was the largest at ₹18,300 crore, followed by Coal India (2010) at nearly ₹15,500 crore and Reliance Power (2008) at ₹11,700 crore.

10. The LIC share sale was earlier expected in March but was delayed amid the Ukraine war.

(With inputs from PTI, Reuters, ANI)