India slashes size of biggest IPO

India has slashed the size of an initial public offering by insurance giant LIC but the share issue will still be the country’s largest to date, with a targeted windfall of $2.7-billion, regulatory filings showed Wednesday.
Prime Minister Narendra Modi’s government is desperate for proceeds from the IPO by Life Insurance Corporation of India and the sale of other state assets to help fix tattered public finances.

The long-awaited IPO — originally slated for March — will open next week, after the government chose to wait out recent market volatility triggered by the Russian invasion of Ukraine, the filing seen by AFP showed.

But the adverse market conditions did force the government to substantially cut its stake sale from an earlier five percent to 3.5 percent. The government will sell 221 million shares within a price band of 902 to 949 rupees, the prospectus showed.

This implies an IPO size of between 200 and 210 billion rupees ($2.61 billion to $2.74 billion), overtaking that of payments firm Paytm, which raised $2.5-billion in November in India’s largest public share sale to date.
The firm warned in its regulatory filing that “there can be no assurance that our corporation will not lose further market share” to private companies.

The insurer is also India’s largest asset manager, with 39.55 trillion rupees under management as of September 30, including significant stakes in Indian blue chips like Reliance and Infosys.

The government hopes LIC’s IPO will attract legions of first-time investors to the stock market, in a country where less than five percent of people have trading accounts.

It will be a crucial step in Modi’s policy to “monetise and modernise” state-run companies and plug an estimated 16.6 trillion rupee fiscal deficit this financial year.

Source: eNCA