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LIC IPO: The Great Fall


LIC’s slogan Yogakshemam Vahamyaha is in Sanskrit language which translates in English as “your welfare is our responsibility” but the IPO of LIC has proved to be completely opposite of it as Life Insurance Corp of India became one of the largest wealth destroyers among Asia’s IPOs (initial public offerings) this year, with a market value wipeout of $17 billion.

It is said about IPOs that the bigger they are the harder they fall. According to data provided by Bloomberg, India’s largest ever IPO has dropped 29 percent since its May 17 debut, ranking second in terms of market capitalization loss since listing. It is now second only to LG Energy Solution Ltd. of South Korea, which suffered a more than 30% peak-to-trough collapse in its share price after an early jump on debut.

LIC’s $2.7 billion initial public offering (IPO) has turned out to be one of Asia’s greatest new stock disasters this year, as rising interest rates and inflation levels globally reduced demand for share sales, and India’s stock market has been hit by unprecedented foreign selling pressure. This year, the S&P BSE Sensex has lost more than 9% of its value.If you had invested Rs 1000 a week ago it would have turned into Rs 900.83.

After a mandated lock-up period for anchor investors ended Friday, LIC’s shares are projected to tumble for the tenth consecutive session, sliding as high as 5.6 percent Monday. The rout has concerned India’s government, with officials stating that the company’s management will “look at all of these areas and will increase shareholder value.”

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