Indian insurance giant slumps after country’s biggest-ever IPO

Indian insurance giant slumps after country’s biggest-ever IPO

MUMBAI: Indian state-owned insurance giant LIC slumped on its market debut Tuesday following the country’s biggest-ever initial public offering, closing nearly eight percent below the IPO price. Prime Minister Narendra Modi’s government raised $2.7 billion by selling 3.5 percent of Life Insurance Corporation of India as his administration seeks to sell off state assets to bolster tattered public finances.

But it was forced to cut back the offer from a planned five percent after markets turned volatile following Russia’s invasion of Ukraine and China’s COVID lockdowns. The offer price of 949 rupees ($12.22) had valued LIC at $77 billion, but the stock traded under pressure all day, closing 7.75 percent lower at 875.45 rupees a share.

The muted debut could test market appetite as Modi seeks to privatize more shares in nationalized companies to plug an estimated 16.6 trillion rupee ($214 billion) fiscal deficit. Market analyst Arun Kejriwal said the slump on LIC’s first day of trading was a “learning” experience, adding that the government will have to do more to convince investors if it wants to sell more of its stake.

But the IPO saw enthusiastic participation from small investors-including many first-timers-and was oversubscribed nearly three times. “I knew it won’t be