Finance
Following strong demand from domestic investors and a last-minute rush by foreign funds, India raised Rs 20,560 crore ($2.7 billion) in its largest-ever initial public offering, which was priced at the top of the range.
Life Insurance Corporation of India’s shares have been priced at Rs 949 each, according to a prospectus filed on Friday. LIC shares were priced between Rs 902 and Rs 949 per share. The stock exchange is set to open for business on May 17.
The float of LIC, 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 – has ended up resembling the Aramco IPO not only in scale but also in its reliance on domestic investors after some foreign buyers deemed it too expensive. Foreign institutional investors increased their bids for the sale in the final hours before the subscription period closed this week, avoiding currency risks and global market uncertainties.
In addition to breaking India’s record for the largest IPO, LIC’s offering is the world’s fourth-largest this year, according to Bloomberg data. The LIC’s debut comes at a time when global capital-market activity has slowed significantly as the conflict in Ukraine fuels market volatility and saps investor appetite.
According to traders, LIC shares are trading at a discount of about Rs 30 to their IPO price in the so-called grey market. The expectation for a strong debut for LIC’s shares is fading as demand in the unregulated market, where investors bet on listing day gains, has declined in recent days.
Because of the discounts offered, retail investors and LIC policyholders were among the most enthusiastic about the offering. The portion set aside for them was completely consumed days before the offering closed. The anchor portion of the IPO attracted sovereign funds from Norway and Singapore, with other foreign investors picking up steam only on the final day.
Overall, the LIC offer was nearly three times oversubscribed. The funds will assist the government in bridging a budget deficit that is expected to grow as commodity prices rise around the world.
According to Bloomberg News, the share sale does not provide large fees to the banks working on the IPO, but it does provide glory in the league table rankings.
Source:BS
