India to trim mega insurer IPO size, issue opens next week

INDIA chose to slash the size of its biggest initial public offering (IPO) by about 60 per cent and press ahead with the sale next week as investor demand wanes amid the war in Ukraine.

Prime Minister Narendra Modi's government will sell 221.3 million shares of Life Insurance Corporation (LIC) of India at 902-949 rupees each, according to people with knowledge of the matter, which could raise as much as 210 billion rupees (S$3.8 billion) at the top end of the price range. That's far lower than the 500 billion rupees targeted earlier.

Even so, the IPO will be India's biggest, surpassing that of One97 Communications' 183 billion rupee sale in November.

A successful listing would need demand from both global and local funds, in a year when foreign investors have withdrawn US$19 billion dollars from Indian stock markets.

The money will help bridge the budget deficit, which risks becoming wider as fuel costs surge.

Representatives at LIC didn't immediately respond to an email seeking comment and a spokesperson at the finance ministry couldn't be immediately reached.

Key Details:

• Government will sell 3.5 per cent stake in state-run LIC, down from 5 per cent planned earlier
• Offer opens for anchor investors May 2, runs May 4-9 for other buyers
• About 10 per cent will be reserved for LIC policyholders who will also get a discount of 60 rupees on the IPO issue price
• Retail investors to get a discount of 45 rupees

The sale, which had previously been touted as India's Aramco moment in reference to the Gulf oil giant's US$29.4 billion listing, will test the depth of India's capital markets. Firms in India have raised about US$1.1 billion through IPOs this year, data compiled by Bloomberg show. That's less than half of the nearly US$3 billion raised in the same period in 2021.

LIC is a household name in India. With 2,000 branches, more than 100,000 employees and about 286 million policies, the Mumbai-headquartered company reaches practically every corner of the country. The 65-year-old firm has almost US$500 billion in assets, 250 million policy holders and makes up almost 2/3 of the market. BLOOMBERG