With a $17 billion loss, LIC IPO is a massive wealth destroyer

• With a $17 billion loss in market value, LIC is one of the greatest wealth destroyers among Asia’s initial public offerings this year.
• The benchmark S&P BSE Sensex has fallen more than 9% this year.

Life Insurance Corp (LIC) of India has been one of the largest wealth destroyers among Asia’s initial public offerings this year, with a $17 billion market value wipeout.

According to Bloomberg data, India’s largest-ever IPO has dropped 29 percent since its May 17 debut, ranking second in terms of market value loss since listing. The dip places it only behind South Korea’s LG Energy Solution Ltd., which witnessed a more than 30% peak-to-trough collapse in its share price after an early surge on launch.

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LIC’s $2.7 billion IPO has turned out to be one of Asia’s greatest new stock disasters this year, with rising interest rates and inflation levels globally hurting demand for share sales and India’s stock market suffering unprecedented selling pressure from foreigners. The benchmark S&P BSE Sensex has fallen more than 9% this year.

LIC’s stock is set to decline for the tenth time in a row, falling as much as 5.6 percent on Monday after a mandated lock-up period for anchor investors concluded on Friday. The rout has concerned India’s government, with officials declaring that the company’s management will “look at all of these areas and will increase shareholder value.”

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The long-delayed IPO of LIC was termed “India’s Aramco moment,” referring to the $29.4 billion IPO of Gulf oil major Saudi Arabian Oil Co. in 2019. It was part of Prime Minister Narendra Modi’s strategy to open up the country’s capital markets. The share sale, which was nearly three times oversubscribed, was intended to reduce the government’s budget deficit as expenditure surged during the pandemic.