LIC Chairman Says Concerns Expressed By Some Foreign Investors About Its IPO
Foreign institutional investors (FIIs) are concerned about Life Insurance Corp’s (LIC) initial public offering (IPO), but global pension funds are “interested” in the Indian state-run insurance giant’s offering, according to the company’s chairman.
M R Kumar’s remarks come a day after LIC filed its initial public offering (IPO) papers, revealing that India plans to generate up to $2.74 billion, or roughly one-third of its original objective, by selling a 3.5 per cent stake in LIC’s IPO.
“FIIs have a concern, (there is) no doubt that they have concerns but long-only funds (pension funds) they don’t mind because they know that they are putting money in for the long haul,” Kumar said in an interview.
He did not address any issues that FIIs may have voiced during the presentations to over 180 investors, following which the government moderated its expectations for the issuance and reduced LIC’s value to 6 trillion rupees from 17 trillion rupees.
According to Reuters, investors are concerned about LIC’s development prospects because the company already controls nearly a third of the Indian insurance market and is losing market share to private firms such as HDFC Life and ICICI Prudential Life.
The country’s largest domestic institutional investor, LIC, had also saved some state-run firms’ minority interest sales when they were undersubscribed by the government.
Kumar anticipates that they will now invest in LIC.
“They are all ready to pitch in, and nobody can go and ask them why are you saving LIC… because they are not saving, they are investing.”
Tuhin Kanta Pandey, secretary at the department of investment and public asset management, said earlier in the day that the LIC IPO would be launched in May due to strong demand and a “solid” anchor investor base.
The LIC IPO will be offered to anchor investors on May 2.
The subscription period for the issue will begin on May 4 and end on May 9.
Pandey also stated that the size of the LIC IPO is “appropriate” under current market conditions, supporting the company’s decision to reduce the share sale plan from 5%.