New Delhi is halving its fundraising target for Life Insurance Corporation of India’s IPO to £300 billion ($3.9 billion) after it had to lower its valuation estimates following feedback from investors, a government source said.
The sharp drop in ambitions for the IPO – which would still be India’s largest yet – is a setback for Prime Minister Narendra Modi’s government, which had positioned the sale as the first and largest in a wave of privatizations aimed at boosting state coffers.
The state insurance giant, also India’s biggest domestic financial investor, is now valued at around £6 trillion, according to the source, which declined to be identified because the IPO talks were confidential.
Earlier government estimates had called the insurer worth around £17 trillion.
“Investors have become very risk averse in recent months. After roadshows, we realized that it makes no sense to prioritize a high rating. A higher valuation can be discovered after listing. After all, the government will still hold nearly 95% of the issuance,” the source said.
The government plans to sell a stake of just over 5%, he said. The source added that new regulatory approval would need to be obtained for the listing process, but didn’t elaborate. The government previously announced it would sell a 5% stake. The Treasury Department did not immediately respond to an email seeking comment.
The government originally planned to list LIC in its most recent fiscal year, which ended March 31, but had to delay the sale after the Russian invasion of Ukraine sparked a market defeat.
The 66-year-old company dominates India’s insurance sector with more than 280 million policies. It was the fifth largest global insurer in terms of insurance premium collection in 2020, the most recent year for which statistics are available.
Investors were concerned that LIC’s investment decisions, including those in loss-making state-owned companies, could be influenced by government demands.
(
