Shares in Life Insurance Corp of India (LIC) fell 7.8 percent on Tuesday after India’s largest initial public offering (IPO) was plagued for weeks by concerns about a declining world economy.
The government raised about 205 billion rupees ($ 2.7 billion) from the sale of a 3.5 percent stake in the IPO, far from its initial target of bringing in up to $ 12 billion.
After missing last year’s IPO frenzy, shares in India’s largest insurer opened at 872 rupees each, compared to their issue price of 949 rupees. They reached a session high of 918.95 rupees.
Below is a timeline of the government’s listing plans for LIC, which controls more than 60 per cent of India’s insurance market.
February 2020: The Indian government is announcing plans to sell part of its stake in LIC through a possible IPO to help achieve a broader $ 29.6 billion state asset disposal target for the fiscal year ending March 2021.
April 2020: LIC’s listing plans have been derailed as the COVID-19 pandemic affects fundraising plans for several companies due to market uncertainty.
December 2020: The sale is further delayed as the government begins for the first time to determine the built-in value of the insurance giant, an exercise that eventually lasts more than a year.
Embedded value is a measure of future cash flow in life insurance companies and the key financial measure for insurers.
February 2021: The government says it plans to sell about 10% of its shares in LIC by the end of March 2022.
January 2022: The government is setting itself a mid-March deadline to raise up to $ 12 billion through an IPO and is asking regulators for a quick review of a draft prospectus.
February 1, 2022: The government announces drastic cuts to plans to sell stakes in state-owned companies. The proposal to lower the overall rejection target reduces LIC IPO expectations to a 5% share sale, up from 10% earlier.
February 3, 2022: LIC’s built-in value has been finalized at more than 5 trillion rupees ($ 66.8 billion), reports Reuters. LIC’s market valuation is seen as two to three times its built-in value.
February 13, 2022: LIC submits its draft IPO documents with a built-in value of 5.39 trillion rupees.
The company management then starts holding virtual roadshows for potential investors.
February24, 2022: Russia is invading Ukraine in what it calls a “special military operation” that is hitting global markets and leading many foreign investors into emerging markets to sell possessions.
February26, 2022: India’s cabinet approves a policy change that allows direct foreign investment of up to 20% in LIC. Government officials remain confident of an IPO by the end of March 2022.
March 1, 2022: Bankers advising LIC are pushing the government to postpone the launch of the IPO due to the market push of the invasion, Reuters reports.
Sources later confirmed that the plan to list LIC will be moved to the next financial year, beginning in April.
22 April 2022: New Delhi could halve its fundraising target for LIC’s IPO to about $ 3.9 billion after valuations were downgraded following investor feedback, a government source said.
26 April 2022: India is filing the IPO prospectus, which further reduces the amount it expects to raise to about $ 2.7 billion from the sale of a 3.5% stake, just a third of its original estimates, after investors Questioned LIC’s growth potential.
2 May 2022: LIC’s IPO opens for an anchor investor subscription that ultimately achieves strong demand and prices at the top of the range.
4 May 2022: The IPO opens for subscriptions from retail and other investors.
17 May 2022: LIC eventually debuted on the stock exchanges, but fell 7.8 percent on its listing day. Analysts predict more pain for investors amid volatile market conditions.