India to trim mega insurer IPO size, issue opens next week

NEW DELHI (BLOOMBERG) - India chose to slash the size of its biggest initial public offering by about 60 per cent and press ahead with the sale next week as investor demand wanes amid the war in Ukraine.

Prime Minister Narendra Modi's government will sell 221.3 million shares of Life Insurance Corporation of India (LIC) at 902-949 rupees (S$16.21 - S$17.05) each, according to people with knowledge of the matter, which could raise as much as 210 billion rupees at the top end of the price range.

That's far lower than the 500 billion rupees targeted earlier.

Even so, the IPO will be India's biggest, surpassing that of One97 Communications Ltd.'s 183 billion rupee sale in November.

A successful listing would need demand from both global and local funds, in a year when foreign investors have withdrawn US$19 billion dollars from Indian stock markets.

The money will help bridge the budget deficit, which risks becoming wider as fuel costs surge.

Representatives at LIC didn't immediately respond to an e-mail seeking comment and a spokesperson at the finance ministry couldn't be immediately reached.

The sale, which had previously been touted as India's Aramco moment in reference to the Gulf oil giant's US$29.4 billion listing, will test the depth of India's capital markets.

Firms in India have raised about US$1.1 billion through IPOs this year, data compiled by Bloomberg show.

That's less than half of the nearly US$3 billion raised in the same period in 2021.

LIC is a household name in India. With 2,000 branches, more than 100,000 employees and about 286 million policies, the Mumbai-headquartered company reaches practically every corner of the country.

The 65-year-old firm has almost US$500 billion in assets, 250 million policy holders and makes up almost two-thirds of the market.