India may concede more ground on its insurance IPO

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Life Insurance Corporation of India (LIC) Chairman Mangalam Ramasubramanian Kumar attends a news conference ahead of the launch of LIC’s initial public offering (IPO) in Mumbai, India April 27, 2022. REUTERS/Francis Mascarenhas – RC2KVT9KW96X

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MUMBAI, May 10 (Reuters Breakingviews) – New Delhi may be even more generous in the historic listing of its state-owned Life Insurance Corporation of India (LIFI.NS). The book for the IPO up to $2.7 billion closed Monday just under 3 times subscribed. The limited enthusiasm follows the government’s reduction in the sale of shares to just 3.5% of the total stock, from 5% previously, and the dramatic reduction in the overall valuation by around two-thirds to 78 billions of dollars. It would also be prudent to price the stock near the lower end of the indicated range.

While the company’s policyholders crowded into the supply, the institutions subscribed at a lower ratio than the entire portfolio. These buyers placed orders for more than 12 times their allotment for LIC’s two main rivals, SBI Life (SBIL.NS) and HDFC Life (HDFL.NS), when they went public in 2017, and nearly 25 times in the 2021 list of digital products. Policybazaar (POLB.BO), owned by PB Fintech. Foreigners were also few among anchor investors, although this group won a shorter than normal 30-day lock-up period.

Getting a deal done in today’s volatile markets is no easy feat, and tighter oversight of leveraged money in IPOs is a drag. Yet caution is the ultimate insurance policy. (By Una Galani)

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Editing by Una Galani and Katrina Hamlin

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