LIC IPO: Foreigners keep away from India's biggest IPO; here's why

On the last day today (May 9), foreign institutional funds have put in orders for 2 percent of the shares set aside for all institutional buyers

FPJ Web DeskUpdated: Monday, May 09, 2022, 05:33 PM IST
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Investors have also had concerns about LIC's ability to keep market share with regard to private players. / Representative image |

Life Insurance Corporation's Initial Public Offer (IPO, the country's biggest public offer, was subscribed 1.79 times on the penultimate day of the offer on Sunday.

On the last day today (May 9), foreign institutional funds have put in orders for 2 percent of the shares set aside for all institutional buyers in the state-owned insurance behemoth, LIC. While the anchor portion of the IPO drew in sovereign funds from Norway and Singapore, most of the shares went to domestic mutual funds, Bloomberg report said.

Why are foreign institutional funds shying away?

Vidya Bala, head of research and co-founder at Chennai-based Primeinvestor.in told Bloomberg, "The Fed rate hike and the recent slide in the rupee against the dollar further enhances risks of currency depreciation that can erode their asset price gains in India."

Investors have also had concerns about LIC's ability to keep market share as private insurers like HDFC Life Insurance Co. Ltd. and SBI Life Insurance Co. Ltd. expand, the report said.

"Foreign institutional investors generally, have never been big on state-run companies as it is very difficult to make money off them,” said Abhay Agarwal, fund manager Piper Serica Advisors Ltd. in the report.

The grey market price (GMP) of the issue was Rs 36 per equity share on Monday. What is keeping foreign investors in abeyance is intense selloff in the global markets, rate hike concerns and inflationary worries, said news reports.

With the public offer which closes later in the day, the government aims to generate about Rs 21,000 crore by diluting 3.5 percent stake in the insurance behemoth.

The tentative LIC IPO allotment date is May 12, 2022, whereas the most likely LIC IPO listing date is May 17, 2022.

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