The state-owned insurance giant LIC, India’s largest-ever IPO, fell 7% from its flotation price of Rs949 when it went public on Tuesday.
In pre-open trade, shares opened at Rs872 against an IPO price of Rs949.
The government raised $2.7 billion by selling 3.5 percent of its stake in the Life Insurance Corporation of India in order to repair the country’s shattered finances.
The floatation, which had been delayed from March due to market volatility and had been scaled back due to low demand, was nearly three times oversubscribed during the six-day application period.
Prime Minister Narendra Modi is attempting to sell off state assets in order to “monetize and modernize” nationalized companies and plug an estimated Rs16.6 trillion ($213.5 billion) fiscal deficit.
LIC shares began trading at a 7% discount to the offer price of 949 rupees, before rising slightly — though still well below the flotation price.
LIC, which was founded in 1956 by nationalizing and combining more than 240 firms, was synonymous with life insurance in post-independence India for decades until private companies entered the market in 2000.
Its army of 1.3 million “LIC agents” gives it huge reach, particularly in remote rural areas, and it continues to lead the pack with a 61 percent market share in India.
However, in the face of competition from internet-savvy private insurers offering specialized products, LIC’s market share has steadily declined.
