Whatâs Going On Here?Reports emerged on Monday that Life Insurance Corporation of India (LIC) is listing on the stock market, as the country agrees to pay whatever it costs to fix its broken economy. What Does This Mean?Like most countries, India has been put through the wringer during the pandemic, and its government has been trying to plug the hole in its budget ever since. So now, itâs looking to raise some money by selling off some of its assets. Enter LIC: you might never have heard of the insurance giant, but itâs a household name in India that â with over 280 million policies under its belt â controls nearly two-thirds of the countryâs market. Itâs also entirely owned by the government, which said itâs planning to sell 5% of the company on the stock market in hopes of raising around $8 billion. That would make it Indiaâs biggest-ever IPO, and the fourth-biggest insurance IPO ever. Why Should I Care?Zooming in: Why now?
This is a bold move considering the timing. First, global stocks have had a terrible start to the year, battered and bruised as central banks threaten to withdraw their support. Second, foreign investors have been pulling their money out of Indiaâs stocks for the last four-straight months. And third, Indiaâs IPOs havenât exactly been panning out: a third of new listings on the Indian stock market last year are now trading below the prices they listed at.
For markets: No pressure, LIC.
Indiaâs stock market did manage to raise a record $18 billion last year, as it tried to position itself as an alternative to China for emerging market investors. But itâll be relying on LIC to break the mold if it wants to keep that dream alive. After all, the current holder of the âbiggest-ever IPOâ title is Paytm, whose share price has fallen over 50% since its debut. | 