LIC: Skipping IPOs helps LIC avoid Paytm rout; company’s gains in

Mumbai: Life Insurance Corp of India (LIC), one of the biggest institutional investors in the stock markets, escaped the brutal losses in because of its standard investment guidelines that usually steer clear of initial public offerings (IPOs).

A senior LIC official told ET on the condition of anonymity that the company does not invest in IPOs as a principle and would rather look at secondary market investments after listing. Those investments are typically dictated by a company’s post-listing performance.

One97 Communications, the parent company of Paytm, has lost nearly a third of its value in three trading sessions since it listed on the stock exchanges on Thursday. The senior LIC official said the company does prefer to keep away from IPOs and invests mostly after there is a track record of the company post listing.

“We never look at IPOs. That’s been the philosophy. If we have to invest we can always look at it later. That’s how we look at it,” the official said.

Paytm shares lost 27% of their value hitting the lower circuit of trading on the first day of listing. It touched a low of ₹1,271 per share but has since recovered slightly to end at ₹1,495 per share on Tuesday.

Even as LIC gave Paytm the miss, it has been two years of back-to-back investment gains for the insurance behemoth. After gaining ₹37,000 crore last fiscal ended March 2021, the insurance giant has made gains of ₹30,000 crore until October this year.

“These would be the best two years running. The advantage we got is not by selling but because we had liquidity and we bought when the markets fell in 2020. We bought, bought and bought and once it started rising, we sold,” the senior official explained.

The insurance giant continues to be a net buyer in the equity markets. “We are still net buyers. It is not that we are selling family silver,” the official said.