India’s first $1 billion IPO in 7 years opens


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India is getting its first $1 billion IPO in nearly a decade — from an insurance company.

SBI Life, a partnership between the State Bank of India and French insurance firm BNP Paribas Cardif, opened its initial public offering on Wednesday. The firm aims to raise up to 84 billion rupees ($1.3 billion), the country’s biggest IPO since government-run mining company Coal India raised $3.4 billion in 2010. That IPO remains the country’s largest ever.

Only nine other Indian IPOs have ever crossed the $1 billion mark, according to data provider Dealogic. Should SBI Life achieve its target, it would rank seventh.

The insurance firm will issue 120 million shares, of which 80 million will come from SBI and the remaining will come from BNPPC. The shares will be priced between 685 rupees ($10.6) and 700 rupees ($10.9), it said, with the company expected to be valued at nearly $11 billion as a result.

“It is signaling that the market is doing well in India,” said Ken Fong, head of equity capital market research for Asia at Dealogic. “You will see more and bigger IPOs.”

Despite India’s rapidly-growing startup and tech sectors, it’s insurance companies whose shares seem to be hottest at the moment following several moves to open up the sector.

SBI Life is the third insurance provider to go public, a year after the first — ICICI Prudential Life Insurance — raised $900 million. At least three more $1 billion-plus insurance IPOs, including state-owned General Insurance Corporation of India, are expected in the coming months, according to Dealogic.

A massive uptick in foreign investment in recent years could also be a factor, Fong said. India’s foreign exchange reserves hit an all-time high this month, crossing $400 billion for the first time, and the government’s decision last year to allow foreign investors to own up to 49% of insurance companies without requiring government approval has provided a boost to the sector.

“The confidence from international investors is high,” Fong said. “And they’re allowed to also invest in those IPOs, so everything is doing well.”

CNNMoney (New Delhi) First published September 20, 2017: 10:01 AM ET


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