India’s largest insurer, Life Insurance Corporation of India, bailed out at least four initial public offerings from the government of India in the financial year 2017-18.
State-owned companies raised nearly Rs 29,126 crore from the primary market, of which at least 49.3 percent was provided by LIC, according to stock exchange data compiled by BloombergQuint. Of the seven companies from the government’s stable that hit the primary markets this year, LIC invested in at least four. The shareholding details of Mishra Dhatu Nigam Ltd., the state-owned manufacturer of special steels and titanium alloys, is not available as the company is yet to list on the exchanges.
The public offerings of the four companies - The New India Assurance Co., General Insurance Corp., Hindustan Aeronautics Ltd., and Bharat Dynamics Ltd., - all received muted response. The total subscription for these companies ranged between 0.99 times and 1.4 times, with most of the demand coming from qualified institutional buyers.
Also Read: LIC Bought 70% Of Shares In Hindustan Aeronautics’ IPO
Government Companies Dominate IPO Market
State-owned companies dominated the primary markets in the year, cornering more than one-third of the total Rs 81,610 crore raised.
Offers for sale accounted for 85 percent of the total Rs 29,126 crore raised by state-owned companies, while the remaining came from fresh issue of shares.
When companies raise funds via the offer for sale route, the proceeds are generally used to pay existing shareholders who are looking to dilute their holding or exit the firm. On the other hand, when companies issue fresh shares, the proceeds can be used to invest in the company or repay debt.
The government fundraising comes in what has been a record year for India’s primary markets. 45 companies raised as much as Rs 81,610 crore through initial share sales – the highest in the last three decades.
Of those 45 companies, 17 are trading below their issue price, while 23 are trading above. The remaining five companies will list in the next financial year starting April 1.