Indian gov-owned LIC eyes IPO

India’s state-run Life Insurance Corporation (LIC) announced yesterday that it would sell 5% of its shares to raise $8B. If approved, it would be the largest IPO in the country’s history.

Why should we care?
If it’s pulled off without a hitch, the sale is slated to reduce the Indian government’s deficit, buoy international and retail recognition of an Indian insurance giant, and diversify LIC’s drive for innovation through public-market pressures. The last variable may bring increasingly tech-centered solutions to India’s insurance landscape in the coming years, rendering LIC an insurtech behemoth in South Asia. It would also encourage the government to lean further into this fundraising model with public sector banks and other institutional assets. But external variables may also bring about the opposite confluence of effects. If the IPO follows in the footsteps of fintech giant Paytm, which has seen its valuation shrink by 50% since its public launch, then government actors may need to reckon with a state-owned company valued at much less than it was pre-IPO—not to mention a hit to LIC’s reputation. Further, an increase in U.S. interest rates would reduce liquidity availability for foreign investment, which would affect the shares’s price due to decreased demand.