LIC follows other large IPOs with weak listing but fares better than Paytm, SBI Card

As largely expected, Life Insurance Corporation (LIC) of India shares made a tepid debut on Dalal Street on Tuesday below Rs 900 against the issue price of Rs 949 per share — upper end of the range.

On the BSE, the stock listed at Rs 867.2 apiece, a discount of Rs 81.8 or 8.6 percent while on NSE, it listed at Rs 872 apiece, a discount of Rs 77 or 8.1 percent.

LIC's weak listing — in line with the mood seen in the grey market — comes after India's biggest initial public offering (IPO) saw a subscription of almost three times with the policyholders bidding for six times the shares reserved for them.

However, the insurer's not-so-great listing doesn't come as a surprise considering that Dalal Street has had a very uncomfortable history with large IPOs including Paytm, SBI Card, and GIC Re.

LIC's largest ever IPO aimed to raise Rs 21,000 crore with the smallest ever dilution of 3.5 percent stake is followed by Paytm which raised Rs 18,300 crore and Coal India with Rs 15,200 crore issue. Among the other large IPOs are GIC Re, SBI Card and Reliance Power which raised anywhere between Rs 10,100 crore and Rs 11,300 crore.

Coal India, SBI Card and Reliance Power had the strongest subscription among large IPOs with interest largely from the qualified institutional buyer (QIB) and high net worth individuals (HNI) categories. Paytm and GIC Re with a subscription of 1.9 times and 1.4 times also saw strong interest from QIBs.

LIC, on the other hand, seeing high interest from policyholders — essentially retail investors — was an exception.

Most of the companies with large IPOs including Paytm, SBI Card, and GIC Re made a disappointing market debut. While Paytm listed at a discount of 9 percent to the issue price, GIC Re started its journey at a discount of 6 percent. SBI Card made a debut at a discount of 13 percent.

The only exception among the large IPOs was Coal India which listed at a premium of 17 percent.

However, there has been no exception in terms of the large IPOs destroying investor wealth in the long term. Four out of five largest IPOs have destroyed wealth with Reliance Power, Coal India, GIC Re and Paytm investors losing 30-96 percent on their investment. SBI Card meanwhile is trading around its issue price.

It is to be seen whether LIC manages to buck the trend and emerges as wealth creator for investors in the long run.