https://www.ndtv.com/business/lic-2-0-flop-wipes-ipo-wealth-of-near-18-billion-more-pain-ahead-3101151
"LIC 2.0" Flop Wipes Over $18 Billion Of IPO Wealth; More Pain Ahead?
LIC IPO losses of over $18 billion is a staggering wealth wipeout.
Edited by Rahul Karunakar Updated: June 26, 2022 10:40 am IST
India's biggest-ever initial public offering (IPO) of Life Insurance
Corporation (LIC), which was touted as the next phase of the country's
insurance behemoth, "LIC 2.0", has flopped since tepid listing at a
discount on benchmark bourses, with losses worth nearly a third in
valuation.
LIC's stock fell on Friday to ₹ 661.70, down 3.2 per cent for the day, and over 30 per cent lower from its issue price of ₹
949 per share, turning it into one of the top destructors of wealth
among IPOs this year after experiencing a near $18 billion market value
wipeout.
Indeed, to put the magnitude of losses in context, having
plunged nearly a third in value since its May 17 debut, LIC IPO now
ranks at the top in capitalisation loss since issue, starting with the
discounted listing and continuous selling pressure.
That despite a mandatory lock-up period for anchor investors for the first 30 days.
While
that regulatory rule was to stop anchor investors from offloading
shares immediately after listing, it has not stopped the bleeding in LIC
shares.
The mandatory lock-in period for 50 per cent of
investments from anchor investors, or the qualified institutional buyer
(QIB), ended on June 10. Still, the remaining 50 per cent of their money
will be locked-in for 90 days from the listing date.
The
government had said it is "concerned" about the temporary blip in LIC's
scrip and that the insurer's management will look into these aspects and
raise shareholders' value.
"We are very concerned about the
temporary blip in LIC share price. People will take time to understand
(the fundamentals of) LIC. LIC management will look into all these
aspects and raise the shareholders' value," DIPAM secretary Tuhin Kanta
Pandey had said earlier this month.
But what has not helped the
country's insurance giant is the disappointing earnings results and a
lack of communication from the firm's management on its growth strategy
and plans.
Since its flop debut on the stock exchanges, the scrip has touched a new low of ₹ 650 and a high of ₹ 920 a few days after its listing, which is well below its offer price of ₹ 949.
The country's biggest insurer and the largest domestic financial investor's market capitalisation (m-cap) fell to ₹ 4.2 lakh crore on Friday, with over ₹ 1.8 lakh crore wiped out.
At the issue price of ₹ 949, the company's m-cap stood slightly over ₹ 6 lakh crore.
Rising interest rates and global inflation have hurt foreign demand for Indian shares.
With no let-up from global markets sell-off expected anytime soon and
India's stock market facing unprecedented selling pressure by
foreigners, more pain is in store for LIC shares.
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In the light of the above news-report, what can we, the long-suffering resigning ex-employees of L.I.C of India say, but the same; that we have been repeating all these days:
L.I.C of India's management officials (read Managing Board of Directors) lack communication skills, transparency, empathy, integrity, expertise, foresight and judgment.
ABOVE ALL, VALUES!
We can feel the pain of the investors whose hard-earned money has gone down L.I.C's black-hole. Just like our hard-earned arrears and difference (due to wage revision) in statutory retirement benefits.
Appalling state of affairs...
We hope that at least now, the investors will be more vigilant!
After all, all that glitters is not gold!
