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Delhi HC recently struck down powers of Banks Board Bureau; new body to select chiefs of PSU banks, insurance firms


The Appointments Committee of the Cabinet (ACC) has approved a government resolution for establishing the Financial Services Institutions Bureau (FSIB) in place of the Banks Board Bureau (BBB). The FSIB will now select the chiefs of public sector banks and insurance companies.

The selection process of top officials of public sector insurance companies was in limbo in the wake of the Delhi High Court decision to strike down the power of BBB to select directors and chiefs of PSU insurers.

The ACC has also approved the appointment of Bhanu Pratap Sharma, former Chairman, BBB, as initial Chairperson of FSlB for a term of two years from the date of notification of government resolution or until further orders, according to a note issued by the Department of Personnel & Training to the Department of Financial Services (DFS).

Other members of the FSIB are Animesh Chauhan, former Chairman and Managing Director, Oriental Bank of Commerce; Shailendra Bhandari, former MD & CEO of ING Vysya Bank and ICICI Asset Management Company; and Deepak Singhal, former ED, RBI in-charge of departments of corporate strategy and budget, corporate services and human
resource.

The new framework was proposed by the DFS. The Cabinet also approved the guidelines for selection of General Managers and Directors (GMDs) of non-life insurance companies.

“The Department (DFS) shall first carry out necessary modifications in the Nationalised Banks (Management and Miscellaneous Provisions) Scheme of 1970/1980 (as amended) with the approval of Finance Minister, and then notify the Government Resolution for establishing FSIB as a single entity for making recommendations for appointments of WTD (Whole-time Director) and NEC (Non-executive Chairmen) in PSBs, PSIs and FIs and Guidelines for selection of GMDs in non-life insurance firms modelled on the guidelines set aside, while substituting references to BBB with FSIB,” the note said.

While deciding another case involving a general manger of a PSU insurer, the Delhi High Court had struck down the BBB’s power to select directors of PSU general insurance companies and the government has already implemented the verdict by cancelling all the appointments of the then serving directors who were selected by the BBB.

Inderjeet Singh, General Manager, New India Assurance (NIA), had gone to Delhi HC on the issue of appointment of Satyajit Tripathy (who is currently CMD, United India Insurance) by the government on the basis of recommendation of the BBB.

In view of Delhi HC’s earlier decision on the BBB and Singh’s pending case in the same court, the Finance Ministry was unable to use the BBB’s platform to select any new CMDs for the PSU insurance companies which it has been doing since 2018.

Meanwhile, NIA, the country’s largest general insurer, has been functioning without a regular CMD for almost last 100 days after Atul Sahai retired from the post in February end. The CMD post at Agriculture Insurance Company also fell vacant. With the delay in starting the selection procedures, the aspirations of some of the senior officials, who are in the race for the top job, are getting thwarted as they are nearing their retirement.

The BBB was originally set up in 2016 to select the CEOs and Executive Directors of public sector banks. However, the government later entrusted BBB to select the chiefs of insurance companies. With the government now clearing the FSIB, the selection process of chiefs of insurance firms is expected to take place in the coming weeks.

EDot: Looking ahead

With the government now clearing the FSIB, the selection process of chiefs of insurance firms is expected to take place in the coming weeks.





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If inflation is prolonged, then it’ll start impacting savings products too: MD & CEO, HDFC Life


Rising inflation has emerged as a key concern all across as it eats into disposable incomes of individuals. Vibha Padalkar, MD and CEO, HDFC Life, told Sandeep Singh that if the inflation is prolonged then it will start hurting demand for savings products too. Stating that the premiums should stabilise now, she also called for the regulator to permit life insurance companies to sell health indemnity as that will allow them to offer innovative solutions to customers. Edited excerpts:

How is inflation hurting the industry and what is the impact of interest rates?

Inflation remains a big concern as it has a bigger impact since it eats into the savings and reduces the disposable income. As disposable incomes reduce, customers react by going for slightly smaller cover or by not covering everyone in the family, etc. If you see the industry numbers, the impact is not much as of now. While there has been some impact on term, it is not so much on savings. However, if inflation is prolonged then it will start impacting savings products too.

As for interest rates’ rise, it is reasonably positive for us. Our transmission is faster and we can pass higher annuity rates. However, the volatility in equity markets is a downside. I think that of the other options to save, insurance continues to do well. The saving quantum itself is, however, reducing.

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The industry has witnessed a rise in premium. Do you see it stabilising now?

The premiums have risen mainly for term policies and the rise has been because of pandemic. Even as there is a lot of talk around rise in premiums, I would like to state that the increase in premium over the last 10 years is less than inflation. Reinsurers have suffered huge losses because of pandemic and if they raise the charge, it is difficult not to raise it. I think, it should stabilise now.

How have Covid death claims been for you?

We have settled claims amounting to over Rs 6,000 crore in FY22 but it has now eased off. We settled close to about 4 lakh claims with gross claims of around Rs 6,000 crore and net claims of Rs 4,300 crore. As a sector I would say that even as it was significantly higher, we paid so many claims without looking too much into the clause I believe that money is important if it is timely. For almost all our non-early claims (if the policy has completed 3 years) we paid within 24 hours or max 48 hours.

While this was for saving schemes, it took around 3 months for term policies as we need to check pre-existing etc and physical checks are required to be done by local field investigator.

Are life insurers getting permission to sell health indemnity?

We have been demanding the regulator to allow us to sell health indemnity but it hasn’t been permitted yet. Our point is that worldwide health sits closer with life than with motor. However, for some reason, general insurers in India are selling health whereas life insurers are not allowed to sell it. That is not logical. We used to be allowed to sell health, but it has been taken away.

My limited point is that life insurers have the largest touch points with their branches and network, but you are not alllowing us to sell. I think the focus should be on penetration of insurance and expansion.

As of now, nothing has moved. We even asked the regulator to allow us to distribute, if you don’t allow us to manufacture. Today, banks can distribute insurance but life insurers can’t distribute health. It doesn’t make sense.

We submitted it almost 18 months ago and the regulator has said that they will look at it. I stay hopeful.

When you say innovations are possible, if you are allowed, what could they be?

Innovation can’t happen if one key piece is missing. For example: When someone is young, he needs more life insurance. Suppose a person is paying Rs 60,000 as premium, I would say that until the age of 55 (nearer to retirement) we would give him maximum of life cover. After that, since he would have built savings too, we will reduce the life cover and increase the health cover. However, for the individual, Rs 60,000 premium will stay constant.

As of now we are not allowed to club various products and sell to the customer, unless we tie up with one insurer. But even that is not seamless.

What are the growth areas for the life insurance?

Growth will come with product innovation. Retirement products are another big growth area. As a nation, pension funds as a per cent of GDP is less than 5 per cent while it is more than 100 per cent in the developed world. While it is increasing, it is not at the desired pace.
People need to understand that the risk of an individual running out of money is very real because of increasing longevity.

How will the merger of HDFC Bank and HDFC limited benefit you?

It can only get significantly better. The way I see it is that today HDFC Bank is my largest distributor, but it is not my parent, so once that happens, there will be full alignment. HDFC Bank will become a financial conglomerate and will not just be a bank. It will have everything to do with any financial service products and will be the parent company of all. They will be able to tell the customer that they know them— if they have a home loan but not insurance etc so the advisory will be better.

If customers give their consent that they would like to be serviced as a single customer, they will be treated as a single customer across all HDFC Group products.





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LIC IPO: A $17 billion loss puts LIC IPO among top Asia wealth losers | India Business News


An eye-popping $17 billion wipeout in market value has made Life Insurance Corp of India one of the biggest wealth destroyers among Asia’s initial public offerings this year.
Having plunged 29% since its May 17 debut, India’s biggest ever IPO now ranks second in terms of market capitalization loss since listing, according to data compiled by Bloomberg. The drop puts it just behind South Korea’s LG Energy Solution Ltd., which saw a more than 30% peak-to-trough decline in its share price after an initial spike on debut.

Almost a month after listing, LIC’s $2.7 billion IPO has turned out to be one of Asia’s biggest new stock flops this year, as rising interest rates and inflation levels globally hurt demand for share sales and with India’s stock market facing unprecedented selling pressure by foreigners. The benchmark S&P BSE Sensex is down more than 9% this year.

LIC’s shares are poised to fall for a 10th consecutive session, slipping as much as 5.6% Monday after a mandatory lock-up period for anchor investors ended Friday. The rout has worried the government, with officials saying the company’s management will “look into all these aspects and will raise shareholders’ value.”
LIC’s long-delayed IPO was dubbed India’s “Aramco moment” in reference to Gulf oil giant Saudi Arabian Oil Co.’s $29.4 billion listing in 2019, the world’s largest. It was part of Prime Minister Narendra Modi’s plans to expand the nation’s capital markets. The share sale, which was oversubscribed by nearly three times, was aimed at narrowing the government’s budget deficit after spending increased during the pandemic.
More pain could be ahead for the stock given its lackluster quarterly results, according to Avinash Gorakshakar, head of research with discount brokerage Profitmart Securities Pvt. “The management’s communication with investors is confusing. They haven’t held an analyst call after the results,” he said. “So there is no clarity on how the company is planning to grow, what is going to be its strategy.”





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LIC Share Price: LIC stock down over 21% since listing, Share under selling pressure as anchor investor lock-in period ends today | India Business News


NEW DELHI: Shares of Life Insurance Corporation of India fell for the tenth consecutive session on June 13 as investors remained jittery over further selling pressure on the counter as the lock-in period for anchor investors in the company’s initial public offering ends today.
At 10 am, the stock was trading down 2.89% at Rs 689.20 on the BSE. The stock is down 21.31% since it listed on May 17. The stock hit a life low of Rs 682 in opening trade.
According to Sebi’s rules for anchor investments in IPOs, investors had to hold the shares for at least one month since allotment in the offer, which was on May 13. So, anchor investors, who bought over 59 million shares, can sell their shares in the open market from Monday. Anchor investors are institutional investors that are allotted shares before the subscription opens for retail and other investors, and have to commit to holding their shares for a certain period after listing.
LIC’s shareholders have already lost more than Rs 1. 5 lakh crore in less than a month since its listing on May 17.
Life Insurance Corporation (LIC) listed on the bourses on May 17 at Rs 872 a share. The government had fixed the issue price of LIC shares at Rs 949 apiece after a successful Initial Public Offering (IPO) which was over-subscribed nearly 3 times.
Since the day of listing, LIC shares have remained below the issue price and had touched a low of Rs 708.70 and a high of Rs 920.
“We are very concerned about the temporary blip in LIC share price. People will take time to understand (fundamentals of) LIC. LIC management will look into all these aspects and will raise the shareholders’ value,” DIPAM secretary Tuhin Kanta Pandey said.
A day before its IPO opened on May 4, LIC had allotted shares worth Rs 5,627 crore to a large number of domestic investors like mutual funds and insurance companies, and to some foreign funds. The shares were allotted at Rs 949, the final IPO price.
Over 70% of LIC’s anchor investors were domestic mutual funds. At the time of the IPO, retail investors were allotment shares at Rs 905 apiece, while policyholders received allottment at Rs 889 per share.
“Insurance is a long-term business; therefore wealth development and compounding occur only over time. One interesting observation that can be witnessed is that the low made on the first day of trade after the 30-day anchor investor’s lock-in period may act as strong support for a further rally for quality stocks. If fundamentals are strong it’s a good time to buy on such dips,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
According to Meena, LIC has several competitive advantages, including a strong brand value, a massive network of agents, and an enviable distribution network. “Further, the company has plans to address concerns with the company like low VNB margins, loss in market share, high reliance on agency channel, etc. Additionally, the company’s issue was priced at a Price to Embedded Value of 1.1x, which was already at a discount compared to its global as well as Indian peers, and the current dip provides further valuation comfort,” he said.
LIC is the only public sector life insurance company in India and primary competitors are private life insurance companies in India.
Brokerage firm Emkay Global Financial initiated coverage with a ‘hold’ rating and a price target of Rs 875.
“While we appreciate LIC’s market-leading position and comfortable valuations, we prefer private sector peers that have better growth, profitability and therefore higher RoEV prospects,” Emkay Global had said earlier this month.
In its first earnings release post shares listing, LIC posted a 17% decline in consolidated net profit to Rs 2,409 crore for the fourth quarter ending March 2022 from Rs 2,917 crore in the year-ago period.





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‘Tata Group most valuable Indian brand; Taj Hotels the strongest’: Report


NEW DELHI: The Tata Group remains the most valuable Indian brand and its oldest company — Taj Hotels — has emerged as the strongest brand in India, according to UK-based Brand Finance (BF), which is the world’s leading sectoral valuation consultancy.
Infosys is now the second most valuable Indian brand, overtaking LIC and SBI is most valuable bank brand in South Asia.
BF list of top 10 most valuable Indian brands in 2022 is — Tata ($24 billion), Infosys ($13 billion), LIC ($11 billion), Reliance Industries Ltd ($8.6 billion), Airtel ($7.7 billion), SBI ($7.5 billion), HDFC Bank ($6.9 billion), Wipro ($6.4 billion) and Mahindra and HCL ($6.1 billion each).
“Tata Group (brand value up 12% to $24 billion) continues to be the most valuable brand in India… retains top position as it led by example through the Covid-19 crisis by innovating using technology to reach the masses. The brand strengthened its strategic business and leadership initiatives with brand building activities across the globe,” BF said in a statement.
“In addition to brand value, BF determines the relative strength of brands through a balanced scorecard of metrics… incorporates original market research data from over 100,000 respondents in more than 35 countries and across nearly 30 sectors. Taj Hotels (brand value up 6% to $314 million) is the strongest brand in the ranking,” it says.
BF list of top 10 strongest Indian brands is: Taj, HDFC Bank, Jio, Amul, LIC, MRF, Britannia, Tanishq, Airtel and Maruti Suzuki.
“The pandemic and subsequent national lockdowns hit the hospitality sector the most, brands had to re-invent their strategies to remain relevant to the need of tourists. Taj was at the forefront of this with agility and strategic initiatives – offering support to the healthcare sector. The hospitality industry is recovering as five-star business hotels in metropolitan cities across the country have seen occupancy reach 75% to 80% in the past month,” BF statement said.
Indian brands in the banking, IT and telecom sectors have a high brand value. “The Indian banking sector is led by State Bank of India (SBI), the brand is the top banking brand in South Asia with a 29% growth in brand value, valued at US$7.5 billion and is sixth most valuable brand in India and is among the top 100 valuable brands in India,” it said.
2022 was a tipping point for the Indian IT services industry as the industry crossed $200 billion in revenue. TCS (brand value up 12% to $16.7 billion) and Infosys (brand value up 52% to $12.8 billion) are among the top 3 most valuable brands globally at the second and third spot respectively – behind Accenture (brand value up 39% to $36.2 billion).
“India is the world’s second-largest telecommunications market with a subscriber base of 1.16 billion users and has registered strong growth in the last decade. Airtel (brand value of $7.7 billion) ranks No.1 in telecommunication sector in India with 28% growth in brand value. At second position, Jio (brand value up 5% to $5.1 billion) shows gains in growth followed by VI (brand value of $767 million) which continues to be resilient despite its numerous business challenges,” it says.
Every year, BF ranks 5,000 of the world’s biggest brands. India’s top 100 most valuable and strongest brands are included in the annual Brand Finance India 100 ranking.





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Bharti AXA Life premium income rises 14 pc


Bharti AXA Life Insurance has posted a 14 per cent growth in total collected premium at Rs 2,602 crore in FY22 from Rs 2,281 crore in FY21. Renewal premium grew by 11 per cent and stood at Rs 1,666 crore in FY22. It posted a 25 per cent growth in weighted new business premium (WNBP) to Rs 730 crore from Rs 582 crore last year, outperforming the overall and private industry growth which stood at 16 per cent and 22 per cent respectively. In Q4 FY22, the company witnessed a 14 per cent growth in WNBP compared to the 13 per cent overall and 9 per cent private industry growth observed in the same period.

Despite the challenging macroeconomic environment, the company recorded a surge of 18 per cent in its assets under management at Rs 11,025 crore in FY22 against Rs 9,374 crore in the last fiscal, said Parag Raja, MD & CEO.





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RBI dividend to Centre slashed by 70% in FY22


MUMBAI: The Reserve Bank of India board on Friday approved a dividend of Rs 30,307 crore to the government for 2021-22, marking a nearly 70% decline in the payout from last year’s Rs 99,122 crore.
The lower dividend comes on the back of a lower realisation from the disinvestment of the government’s shares in LIC. Over the last few years, the RBI’s large surplus transfers have helped the government meet its higher spending requirements. While the Centre will see an increase in expenditure commitments during the current financial year too as subsidies are projected to rise, it will have to depend on tax revenues to bridge the gap.
There have been multiple factors driving down the surplus this year. A major cost for the RBI was the interest that is paid to banks on money that they parked with it under the liquidity adjustment facility. The central bank has been paying thousands of crores to banks after impounding the surplus liquidity it had pumped into banks in the wake of the Covid pandemic.
The RBI has also taken a hit on its foreign investment as the value of debt securities fell due to the rise in interest rates. It has also had to spend over $40 billion of its reserves to stem volatility in the market and will need to set aside more money to replenish reserves.
“The board approved the transfer of Rs 30,307 crore as surplus to the central government for the accounting year 2021-22 while deciding to maintain the contingency risk buffer at 5.50%,” the RBI said in a statement.
“For the year, the government is targeting around Rs 74,000 crore as dividend from RBI, public sector banks and other financial institutions. This will mean that a large part of the profit of PSBs and FIs will have to be transferred to make good this number or else there will be a slippage,” said Madan Sabnavis, chief economist, Bank of Baroda.
Last year’s dividend of Rs 99,122 crore was higher than expected as it was for only nine months (July 2020 to March 2021). From FY21, the government had decided to align the RBI’s accounting year with the government’s financial year. Earlier, RBI had a July-June accounting year.
The RBI, in its release, said that the board also reviewed the current economic situation, global and domestic challenges and the impact of recent geopolitical developments. “The board also discussed the working of the RBI during the year April 2021-March 2022 and approved the annual report and accounts for the accounting year 2021-22,” the statement said.
Bankers do not rule out the possibility of another interim dividend. “The RBI’s earnings increase during market volatility. The dollars sold by the central bank during the current financial year, when the rupee breached 77 levels, would have earned it a large profit,” said a treasury head with a private bank.





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US rate hike fears spook markets


The meltdown in the US markets on Wednesday on fears of aggressive interest rate hikes rattled domestic markets investors, with key indices plunging 2.61 per cent on Thursday. With the sell-off led by foreign investors sending the pivotals crashing, the benchmark Sensex plummeted 1,416.3 points to 52,792.23 and the NSE Nifty fell 430.9 points to 15,809.40.

The rupee, too, extended losses, falling another 10 paise to close at a record low of 77.72 against the US dollar on Thursday, weighed down by a negative trend in domestic equities and unabated foreign fund outflows.

Foreign portfolio investors (FPIs) pulled out another Rs 4,899 crore, taking the total outflows to Rs 42,836 crore in May. Domestic institutions bought stocks worth Rs 3,225 crore but failed to prevent the market slide. The Sensex has fallen 4,183 points in May alone. LIC shares fell by 4.05 per cent to Rs 840.75 as against the IPO offer price of Rs 949. RIL plummeted 2.35 per cent, SBI 2.24 per cent and TCS crashed 5.17 per cent.

Markets plunged sharply lower, pressurised by weak global cues. The meltdown in the US markets, on the fear of aggressive rate hikes, rattled investors and triggered a weak start. “The situation worsened further due to heavy selling in the index majors across sectors wherein IT and metal majors were among the top losers,” Ajit Mishra, VP – Research, Religare Broking Ltd.

The broader indices too traded in sync with the benchmark and lost in the range of 2.5-3 per cent.

Thursday’s fall indicates that bears are in control as the Nifty has completely reversed the recent gains and again reached closer to the March low. In this highly volatile market, investors can focus on sectors like FMCG, pharma, capital goods and manufacturing whose valuations are moderate and reasonable on a long-term basis, said Vinod Nair, head of research, Geojit Financial Services.

On Wall Street, key indices extended losses on Thursday as investors fretted over the impact of surging inflation on US economic growth and corporate earnings. At 2:32 pm ET, the Dow Jones fell 0.5 per cent to 31,318 while the S&P 500 dropped 0.2 per cent to 3,914.





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LIC lists at discount to IPO price, closes 8% lower at Rs 875


MUMBAI: Life insurance behemoth LIC on Tuesday listed at Rs 867, an 8.6% discount to its offer price of Rs 949 and closed the maiden trading day on the bourses at Rs 875, down nearly 8% from its IPO price. At the close of the session, shareholders in LIC lost about Rs 46,500 crore with the company’s market capitalisation now at Rs 5.5 lakh crore, compared to about Rs 6 lakh crore going by its IPO price.
The majority government-owned life insurer is now the fifth most valued company in India, behind RIL, TCS, HDFC Bank and Infosys but ahead of giants like HUL, ICICI Bank and SBI, data from BSE showed. It’s also the most valued PSU entity, ahead of SBI, ONGC and NTPC.
On Tuesday, nearly 5 crore shares changed hands on NSE while on the BSE the corresponding number was about 27.6 lakh.

In the run up to LIC’s listing, the premium in the unofficial grey market had vanished, which indicated a muted listing for the life insurer. Post listing, LIC’s policyholders who got the shares at Rs 889 and retail investors who were allotted at Rs 904, saw marginal losses to their holdings. Other shareholders were allotted the shares at Rs 949.
On May 9, LIC closed its Rs 21,000-crore IPO with a subscription figure of nearly three times. Its policyholders and retail shareholders led the subscription figures, along with some strong support from local institutions. Through the offer the government sold 3.5% of its stake, or about 22.1 crore shares of the life insurer.
A report by global financial house Macquarie put a price target of Rs 1,000 with a neutral rating. According to its analysts, volatility in LIC’s embedded value (EV) worried them. Unlike regular manufacturing and services companies which are valued based on their earnings-per-share or book value, insurance companies are valued by their EVs which take care of the value of the assets they hold.
According to the report, over time, LIC’s market share in individual business (retail) has fallen due to lack of a “diversified product portfolio and excessive focus on single premium and group business.” It’s to be seen if LIC is able to diversify its product mix in favour of high margin non-par products, they wrote.
Another point of concern for Macquarie analysts is the inherent volatility in LIC’s EV, given a large portion of its EV constitutes marked-to-market unrealised equity gains. “Any investor who is taking an exposure to LIC stock is indirectly taking an exposure to equity markets and the inherent volatility that comes with it,” its analysts led by Suresh Ganapathy wrote. They estimated that a 10% fall in equity markets can erode about 7% of LIC’s EV, compared to around 1-2% for its private-sector peers.





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Faith of millions of small investors put to test with LIC debut


NEW DELHI: Millions of Indians investing in the country’s biggest listing could turn sour on the equity market if the stock follows the poor performance of its state-run predecessors.
Prime Minister Narendra Modi’s government raised $2.7 billion by selling shares in Life Insurance Corporation of India, including to millions of families nationwide that hold LIC policies. The stock starts trading Tuesday at a time when markets worldwide are being roiled by the fallout of Russia’s invasion of Ukraine and rising interest rates.
While deep-pocketed global funds can withstand volatility, small investors — especially first-time shareholders such as the ones created by by LIC’s listing — risk being burned if the stock underperforms. Of the 21 Indian state-run companies that debuted in the stock market since 2010, half are still trading below their issue price.
“The mood could turn sour if the market price falls,” said Amitabh Dubey, a political analyst at research company TS Lombard. “The government could face criticism.”
Headquartered in Mumbai, LIC is a household name in India, with 2,000 branches, more than 100,000 employees and 286 million policies. The 65-year-old firm has almost $500 billion in assets, 250 million policy holders and makes up almost two-thirds of the market.
“The emotional argument of LIC being a behemoth and its brand value need to be turned into profitability for retail investors,” said Subhash Chandra Garg, a former top bureaucrat at the Finance Ministry in the Modi government.
LIC’s offer was oversubscribed by nearly three times, with policyholders placing bids for over six times and the employee portion receiving orders for four times the shares reserved for them. While the anchor portion of the IPO drew in sovereign funds from Norway and Singapore, most of the shares went to domestic mutual funds.
Funds from IPO will be critical to bolstering government finances and meeting a deficit target of 6.4% of gross domestic product for the fiscal year that began April 1. The funds could also be used to give tax relief on fuel to individuals, who are struggling with inflation at an eight-year high.
LIC’s debut, which is expected to bolster Modi’s image as a reformer and energize other privatization plans, comes when capital-market activity has significantly slowed amid weakness in global equity markets. Foreigners have pulled out a record almost $25 billion from local stocks since the start of October. The benchmark S&P BSE sensex capped a fifth straight weekly loss on Friday, the longest run of declines since April 2020.
Modi’s popularity is unlikely to be impacted if LIC shares slide, while his Bharatiya Janata Party faces no substantial opposition and has won several key states. “The government’s popularity and image will be unscathed” as the fractured opposition can’t challenge the narrative that a listing will make LIC efficient and profitable, said Akshay Dhume, professor at the department of economics in Alliance University, Bengaluru.
A spokesperson for the prime minister’s office didn’t respond to requests for comment.
Smaller investors are expected to ride out any early price swoon, which is likely given that the so-called “gray market” is indicating that shares may slip 30 rupees from their IPO price of 949.
The bigger test will be how LIC stock performs over a longer period, which may be a disappointment if earlier state IPOs are any indication, including Coal India Ltd., General Insurance Corp. and New India Assurance Co. Ltd. GIC and New India Assurance, the two state-run insurers that were listed in 2017, have been the worst performers, trading about 75% below their IPO prices.
The tide has also turned for recently-listed companies. The S&P BSE IPO Index, a gauge of newly listed shares, has fallen nearly 26% so far this year. The country’s biggest IPO until LIC, Paytm, is the index’s worst performer, down 75% since its highly anticipated float in November.





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