Why Foreign Investors Have Mostly Steered Clear Of Mega LIC IPO
Foreign institutional investors have on the whole steered clear of India's biggest share sale, deeming it too expensive given currency risks and the global market backdrop.With just hours to go until the end of the subscription period for the $2.7 billion initial public offering of Life Insurance Corporation of India, foreign institutional funds have put in orders for merely 2% of the shares set aside for all institutional buyers.While the anchor portion of the IPO drew in sovereign funds from Norway and Singapore, most of the shares went to domestic mutual funds.“Foreign institutional investors have been pulling out heavily in the secondary market since October. The Fed rate hike and the recent slide in the rupee against the dollar further enhances risks of currency depreciation that can erode their asset price gains in India,” said Vidya Bala, head of research and co-founder at Chennai-based Primeinvestor.in.LIC has been seeking to drum up interest with newspaper advertisements since the start of the year, seeking to take advantage of a retail investment boom in India.While foreign investors have shunned the deal, retail buyers have been piling in. Policyholders placed bids for five times the shares reserved for them, while the employee portion received orders for almost four times the amount available, stock exchange data showed. Retail investors and policyholders receive discounts on the offer price.