Insurance Scrips: Is It The Best Time?

While 2017 was an active year for insurance IPOs, 2018 witnessed a lull

- Himali Patel

Stock market in 2016 went euphoric when ICICI Prudential life insurance became the first company to go public. In 2017, there were a spate of life insurance and non-life insurance initial public offerings (IPOs) including SBI Life, New India Assurance, GIC RE, HDFC Life and ICICI Lombard General Insurance. And immediately after their launch all their stocks were oversubscribed. However, the slowdown in the broader markets majorly on account of long-term capital gain (LTCG) being introduced in the Union Budget, concerns over steep valuation and reclassification of mutual fund schemes by Sebi impacted the primary market in 2018. Further, the liquidity crisis and risk aversion post defaults by IL&FS group also had huge impact on the availability of funds to businesses, investors and consumers.

Although major private life insurance companies like SBI Life, ICICI Prudential and HDFC Life were already listed; the equity markets in 2018 were not conducive for IPO especially for smaller players. With that, 2018 saw a long pause in the IPOs since quarter fourth of Financial Year (FY) 2018. “As against an IPO fund raise of 81,553 crore in FY 2017-18, the current FY 2018-19 saw a massive decline of 82.5 per cent with a fund raise of only 14,243 crore. The dampened sentiment impacted the launch of IPOs including Insurance IPOs,” said Amishi Kapadia, Group President and Global Head (Merchant Banking), Yes Securities.