Four key facts about India's record LIC IPO as shares tumble on debut

Life Insurance Corporation of India fell nearly 8% on their market debut on Tuesday despite the country`s largest ever IPO being oversubscribed at the top of the price range.

The government raised around $2.7 billion from selling a 3.5% stake in state-owned LIC which commands a majority of the market.

The listing comes as India`s IPO market is slowing, with first-quarter proceeds raised through India`s primary markets worth $995 million via the three largest IPOs compared with $2.57 billion a year earlier, EY said in a report on Monday.

Here are four key points regarding LIC`s listing:

PRICING

The price range for LIC`s issue was set between 902 and 949 rupees per share. LIC offered a discount to employees and retail investors of 45 rupees per share, while policyholders were given a discount of 60 rupees per share.

Investors bid for 478.4 million shares compared with the total 162.1 million on offer. Apart from retail and institutional investors, a clutch of foreign investors and several domestic mutual fund houses had bid for its anchor book.

INVESTMENTS

The insurer has an investment of 9.8 trillion rupees in equities as of December 2021 and about 4% of total of the National Stock Exchange`s market cap is held by LIC.

It also has assets under management of 39.56 trillion rupees as of Sept. 30, 2021 - more than three times the total AUM of all private life insurers in Asia`s third largest economy.

COMPETITION

The firm is a household name in India and has a majority market share. However, new business has been growing at a tepid pace compared to some other players and increased competition from private insurers has led to the firm losing some ground.

LIC`s market share has dropped to 63% from 66% in 2019, according to data from the insurance regulator. The company now expects the market share to settle around current levels as it boosts its digital presence and ramps up distribution channels.

CUSTOMER BASE AND DISTRIBUTION NETWORK

LIC has sold over 280 million policies and has the largest agent network in the country with 1.33 million registered agents as of December.

The agent network has played a key role in drumming up interest among policyholders ahead of the IPO.

The Mumbai-based insurer also has the highest brand value of $8.65 billion in FY21, according to a report by Brand Finance which also valued it as the tenth most valuable insurance brand globally.