India’s biggest IPO opens in midst of volatile markets

State-owned Life Insurance Corporation’s (LIC) $2.7bn IPO, India’s largest, has opened to subscriptions from retail and other investors following strong demand from anchor investors led by domestic mutual funds.

The Indian government expects to raise the sum, just a third of its original target, by selling a 3.5 percent stake in the country’s top insurance company, giving it an initial value of $78.52bn.

In the hours after the IPO was opened to retail subscribers, Indian stock exchanges fell as the country’s central bank announced a surprise increase in the key policy rate.

The NSE Nifty 50 index was down 1.7 percent at 16,780 by 08:44 GMT, while the S&P BSE Sensex fell 1.6 percent to 56,058.

The Reserve Bank of India’s monetary policy committee raised the key lending rate by 40 basis points to 4.4 percent, citing persistent inflationary pressures in the economy.

The subscription, which opened on Wednesday and is set to close on May 9, will offer a discount to employees and retail investors of 45 rupees ($0.58) per share. LIC policyholders will be offered a discount of 60 rupees ($0.78) per share.

The price range for the issue has been set between 902 rupees and 949 rupees ($11.79-12.41) per share.

After a reservation for employees and policyholders, the remaining shares will be allocated in a ratio of 50 percent to qualified institutional buyers, 35 percent to retail investors and 15 percent to non-institutional investors.