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HDFC Life Shares Close 19% Higher in Market Debut

HDFC Standard Life Insurance Co. Ltd's shares surged in their trading debut on Friday after its IPO raised $1.3 billion last week

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HDFC Life Shares Close 19% Higher in Market Debut

India has seen a record year for IPOs with initial share sales topping $11 billion


Mumbai: HDFC Standard Life Insurance Co. Ltd's shares closed 18.7% higher in their trading debut on Friday after its IPO raised $1.3 billion last week, bucking a trend of lacklustre market debuts by Indian insurers on valuation worries. HDFC Life shares closed at Rs 344.25, below an earlier high of Rs 369 and compared to the IPO issue price of Rs 290. The gains were aided by an upgrade of India's sovereign bond rating by Moody's, which lifted the main Mumbai market index up 1.14 per cent.

India has seen a record year for IPOs with initial share sales topping $11 billion so far in 2017. But high valuations, especially for some recent big insurers, have led to weak trading debuts. HDFC Life's IPO was the fourth billion-dollar plus IPO this year. State-run General Insurance Corp, which listed on October 25 after a $1.7 billion IPO that was the biggest this year, is trading 11.6 per cent lower than its IPO price of Rs 912. And New India Assurance Co Ltd, the biggest non-life insurer and whose IPO raised $1.5 billion, fell around 9 per cent this week.

HDFC Life's rival SBI Life has also shed 6.4 per cent since its listing last month after a $1.3 billion IPO. HDFC Life was priced at 4.7 times its 2017/18 embedded value versus SBI Life's 3.9 times and ICICI Prudential's 3.4 times, brokerage Centrum said in a pre-IPO note.

HDFC Life's two main shareholders - Housing Development Finance Corp and Standard Life - sold a combined 15 per cent stake in the insurer's IPO which was subscribed nearly five times.

While institutional investors had lapped up the IPO, the portion reserved for retail shareholders was not fully subscribed, reflecting the concerns over high valuations.


 
© Thomson Reuters 2017


(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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