- The government is likely to hold a meeting to reassess the timing of the LIC IPO and postpone it to the next financial year in view of the volatility in the markets due to the escalating Russia-Ukraine war.
- “The process for it is already on and we are prepared to go ahead but when a war of this magnitude is happening, a review is certainly required,” a top government official said.
- The government is trying to rope in the Abu Dhabi Investment Authority (ADIA) and the Govt of Singapore Investment Corp as anchor Investors.
The government is likely to hold a meeting to reassess the timing of the LIC IPO and postpone it to the next financial year in view of the volatility in the markets due to the escalating Russia-Ukraine war.
The LIC IPO is considered to be the largest public offering by any Indian Company and is said to be eyed globally. According to the draft offer document filed on February 13, the government will be selling 5% of its stake in India’s biggest life insurance company.
In a recent interview with Hindu Business Line, Finance Minister Nirmala Sitharaman suggested that the emerging global situation may warrant a relook at the IPO timing.
“Ideally, I’d like to go ahead with it because we had planned it for some time based purely on Indian considerations,” Sitharaman told the newspaper, adding that “if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again”.
“The process for it is already on and we are prepared to go ahead but when a war of this magnitude is happening, a review is certainly required,” a top government official said.
The issue price is yet to be decided, however, some estimates peg the offered size at about ₹63,000 crores. A major concern is that such a big sale may be difficult in the current volatile market.
Foreign investors have been selling heavily and the Sensex is down by nearly 10% from its mid-January peak of over 61,000. Brent Crude prices have soared past $118 a barrel, the highest level in nine years.
The government is trying to rope in the Abu Dhabi Investment Authority (ADIA) and the Govt of Singapore Investment Corp as anchor Investors. “Postponement of the LIC IPO could add pressure on the rupee, which is already under strain because of the war in Europe.
After the LIC IPO was announced, FIIs had taken positions in the offshore forward market in anticipation. They may now reverse the position,” said K N Dey of United Financial Consultants
“The delay in LIC IPO may not lead to a spike in bond yields but, combined with rising crude oil prices, that may force the government to cut duties on it and lower taxes on petro products, there could be a spike in 10-year yields next month onwards,” said a debt market player.
