India's largest-ever IPO will test foreign investor appetite

cnbc.com:

The dominant player in India's life insurance market, Life Insurance Corporation, opens its initial public offering for subscription Wednesday in the country's largest-ever IPO.

The government is selling a 3.5% stake in state-owned insurance behemoth LIC for an estimated $2.74 billion. The corporation will offer about 22.13 million shares for between 902 and 949 Indian rupees, or the equivalent of $11.78 to $12.39 a share at Tuesday's exchange rates.

Trusted by millions and with enormous reach across the country, LIC is second only to bank deposits as a haven of savings in India. Between 2019 and 2021, LIC's share of household financial savings grew 3.4 percentage points to 19.4%. That's ahead of pension funds' 16.7% share, while bank deposits dropped 7.1 percentage points to 29.4% during the same period.

LIC had a monopoly in India's insurance market until 2000 and is still the dominant player, commanding about two-thirds of the life insurance market. In the fiscal year ending March 2021, LIC's market share stood at 64.14%, down marginally from 66.22% in the previous year.

The IPO, initially planned for February, was postponed because of the Ukraine war and the outflow of institutional funds from the stock market. Since January, about $16 billion of foreign capital has left Indian markets. The size of LIC's offering, which was initially pegged at5%, was scaled down to 3.5%.

The company's current implied valuation of $80 billion is roughly half of what it was in February, falling at least in part due to market conditions. It had previously planned to offer a 5% stake for about $8 billion.

Speaking to CNBC, former chief economic advisor to the government of India, Arvind Virmani, dismissed talk of the IPO being badly