LIC’s IPO, which had previously been touted as India’s Aramco moment in reference to the US$29.4 billion listing of Gulf oil giant Saudi Arabian Oil Co., is testing the depth of India’s capital market. While India’s government has pared back its original fundraising goal by about 60% -- as the war in Ukraine eroded investor appetite -- the offering will still be the nation’s biggest.
Founded in the late 1950s, LIC is the country’s oldest insurer, and had the market to itself until the government opened it up to private competition in 2000. It remains India’s largest insurer with a sales agent in almost every neighbourhood across the country of about 1.4 billion people. The listing is expected to lure small-town retail investors and loyal policyholders with an emotional attachment to the firm.
LIC has a 60% market share of India’s 24-company-strong life insurance market, but its hold is shrinking as private players like HDFC Life Insurance Co. and SBI Life Insurance Co. chip away at its dominance. The private sector has been on an aggressive expansion spree during the Covid-19 pandemic, growing new individual policy premiums while LIC struggles.
