Insurance

LIC Listing: LIC Risks Listing Lower On Stock Exchanges Tomorrow: 5 Points

LIC Listing: LIC Risks Listing Lower On Stock Exchanges Tomorrow: 5 Points
Written by Arindam

LIC IPO: LIC Risks Listing Lower On Stock Exchanges Tomorrow: 5 Points

LIC Listing: Risks are that LIC will list its shares lower on Tuesday: Key highlights

The Life Insurance Corporation’s (LIC) record Rs 21,000 crore initial public offering (IPO) received tremendous demand; however, the insurance behemoth risks listing its shares at a lower price on stocks exchanges on Tuesday.

Will Retail Investors Risk Losses From LIC IPO, Key Highlights:

  1. LIC has priced its public offer, India’s largest-ever, at the top of the indicated range (Rs 902-949), at Rs 949, based on the allotment news. But the premium for LIC shares in the grey market has fallen nearly 90 per cent since the IPO opened for subscription on May 9, underscoring sentiment that the risks are tilted toward lower listing on stock exchanges. 

  2. Indeed, LIC shares were trading at a discount of around Rs 30 in the grey market from the upper end of the price band, a sharp decline from a premium of 100 rupees earlier this month.

  3. Financial markets have been whiplashed on stagflation worries as major central banks are poised on an aggressive interest rate hike path to combat multi-decade high inflation. Emerging markets assets have taken a beating on foreign capital exodus driven by the dollar’s appeal on a general increase in flight-to-safety trades. Indian bourses extended their losses for six straight sessions on Friday after falling over 2 per cent in April. The Indian rupee hit new record lows repeatedly last week and breached previous life lows several times. The rupee closed at an all-time low of 77.50 per dollar on Thursday.

  4. Despite wild gyrations in global financial markets, LIC’s IPO got an overwhelming response. The offer was oversubscribed nearly three times, led by policyholders who bid for over six times the shares on offer. But general expectations point to a lower price listing of LIC shares on Indian bourses on May 17 on global cues.

  5. While there has been criticism from several quarters on the timing of the LIC IPO, the government has raised Rs 21,000 crore by offering 3.5 per cent of its stake in the insurance company, about a third of its original target plan.

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Arindam

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