India can concede more ground on its insurance IPO

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

MUMBAI, May 10 (Reuters Breakingviews) – New Delhi can be even more generous in the landmark listing of its state-owned Life Insurance Corporation of India (LIFI.NS). The book for the up to $ 2.7 billion initial public offering closed on Monday just under 3 times subscribed. The limited enthusiasm follows the government shrinking the share sale to just 3.5% of the total stock, down from 5%, and dramatically slashing the overall valuation by roughly two thirds to $ 78 billion. It would be prudent to price shares near the lower end of the indicated range too.

While the company policyholders piled into the offering, institutions subscribed at a lower ratio than the overall book. Such buyers placed orders for more than 12 times their allotment for LIC’s top two rivals, SBI Life (SBIL.NS) and HDFC Life (HDFL.NS), when they went public in 2017, and almost 25 times in the 2021 listing of digital upstart PB Fintech-owned Policybazaar (POLB.BO). Foreigners were also few among anchor investors despite that group winning a shorter-than-normal 30-day lockup period.

To get any deal done in current volatile markets is no small feat, and tighter policing of leveraged money in IPOs is a drag. Still, caution is the ultimate insurance policy. (By Una Galani)

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Editing by Una Galani and Katrina Hamlin

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