The mega IPO of the Life Insurance Corporation of India (LIC) is one of the most awaited financial events. The Centre had earlier said the IPO would be scheduled for this month. However, after the Russian invasion of Ukraine, increasing market volatility and uncertainties may push the government to postpone the IPO to next year, reports suggest.
The Centre is closely observing the market before taking a call on the final timeline of the LIC IPO, Tuhin Kanta Pandey, department of investment and public asset management secretary, said on Friday to the Financial Express.
Experts and underwriters of LIC indicated muted interest during initial meetings with potential anchor investors. Fund managers have become vary of making major commitments amid the market volatility.
At an event organised by the Competition Commission of India, Pandey said the government will keep the best interest of investors and stakeholders in mind and hinted that the current market situation may require a change in the timeline of the IPO.
“That (to come out with the IPO by March-end) has always been our desire, but now with this crisis (Russia-Ukraine) which has come up, we have to be watchful and make our strategy accordingly” Pandey said as reported by Financial Express.
Earlier, a Bloomberg report had suggested that bankers and officials are preparing to shift the IPO listing to the next fiscal. A formal announcement is expected next week, the report said.
Finance Minister Nirmala Sitharaman had also indicated a review of the IPO launch date in view of the evolving geopolitical situation. Sitharaman had said that she would ideally want to go ahead with the initial plan. But if the global considerations warrant her to review the timing of the issue then she wouldn’t mind looking at it again, she said in an interview with the Hindu Business Line.
The Russia-Ukraine conflict has impacted global stock markets, including BSE Sensex and NSE Nifty along with international oil prices. Global inflation is also expected to go up as a result.
The BSE-Sensex on Friday opened weak and slumped over 1,200 points to the day’s low of 53,887.72. Similarly, the broader NSE Nifty slumped 252.70 points or 1.53% to end at 16,245.35.
“The current geopolitical issue between Russia and Ukraine make the global equity markets jittery. The Indian markets also reacted negatively to this development and corrected nearly 11 per cent from its all-time high. Thus, the current market volatility is not conducive for the LIC IPO,” Arijit Malakar, head of retail equity research, Ashika Group, told news18.
The delay in the LIC IPO will be a massive setback for the government which has already scaled down its asset sale target following the deferment of privatization of other state-run companies, including Bharat Petroleum Corp Ltd. The government aimed to shrink the shortfall in the target to 6.9 percent of GDP with the LIC IPO that would account for approximately 3 percent of the total revenue. However, it seems India will have to wait a bit longer for its Aramco moment.