The central government is likely to review the timing of launching the initial public offering (IPO) of LIC amid the ongoing war between Russia and Ukraine, Finance Minister Nirmala Sitharaman has said.
In an interview with the Hindu BusinessLine, FM Sitharaman said, “When I last commented on this matter, the tension was building up. Now there’s a full-scale war. Therefore, I need to go back and review the situation.”
She said ‘ideally’ the government would like to go ahead with the much awaited mega IPO. However, if global circumstances demand, the FM said she won’t hesitate to look into it again.
RUSSIA-UKRAINE CONFLICT IMPACT
The conflict in eastern Europe has impacted global stock markets, including the BSE Sensex and NSE Nifty, and international oil prices. Several experts have cautioned that global inflation level may go up due to Russia’s invasion of Ukraine.
STAGE SET FOR MARKET LAUNCH
Last week, the Union Cabinet chaired by Prime Minister Narendra Modi permitted up to 20 per cent foreign direct investment (FDI) under automatic route in IPO-bound LIC with the aim of facilitating disinvestment of the country’s largest insurer.
Setting the stage for the country’s biggest-ever public offering, Life Insurance Corporation on February 13 filed draft papers with capital market regulator Sebi for the sale of 5 per cent stake by the government for an estimated Rs 63,000 crore.
LIC IPO DETAILS
The initial public offering (IPO) of over 31.6 crore shares or 5 per cent government stake is likely to hit D-street in March. Employees and policyholders of the insurance behemoth would get a discount over the floor price.
According to the draft red herring prospectus (DRHP), LIC’s embedded value, which is a measure of the consolidated shareholders value in an insurance company, has been pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
Although the DRHP does not disclose the market valuation of LIC, as per industry standards, it would be about three times the embedded value or around Rs 16 lakh crore.
BIGGEST IPO IN INDIA
The LIC public issue would be the biggest IPO in the history of the Indian stock market. Once listed, LIC’s market valuation would be comparable to top companies like RIL and TCS.
So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
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