Foreign institutional investors largely avoided India’s largest stock auction, deeming it too costly in light of currency uncertainties and global market circumstances.
Just hours before the subscription period ended, foreign institutional funds made orders for only 8% of the shares in LIC’s $2.7 billion initial public offerings.
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The anchor component of the IPO attracted sovereign wealth funds from Norway and Singapore, while the majority of the shares went to domestic mutual funds.
“Since October of last year, foreign institutional investors have been actively withdrawing from the Indian secondary market.” “The Fed’s rate hike, as well as the rupiah’s recent loss against the dollar, have increased the risk of currency depreciation, which could stymie the price rise of their assets in India,” said Vidya Bala, Primeinvestor.in’s head of research and co-founder.
According to Abhay Agarwal, fund manager at Piper Serial Advisors Ltd., foreign institutional investors have never been significant investors in state-owned enterprises because they are difficult to profit from. Therefore, the LIC will favor shareholders over government entities.