The government may postpone the mega-initial public offering (IPO) of Life Insurance Corporation until next fiscal year as the government is likely to hold a meeting to reassess the timing of the IPO in view of the escalating war between Russia and Ukraine , sources told CNBC TV18.
The government will continue its public offering roadshows, a government official said. LIC’s IPO is considered the largest public offering by an Indian company and is touted as a globally viewed public listing.
A government official aware of the development has said the LIC list review meeting will be held “this week”. recent interview with Hindu Business Line, where she suggested the emerging global situation could warrant a rethink of IPO timing.
“Ideally, I’d like to go through with it because we’d been planning it for a while based on purely Indian considerations,” Sitharaman told the paper, adding that “if global considerations warrant looking at it, I wouldn’t mind to look at it again”.
LIC IPO: impact of the delay
The conflict in Eastern Europe has impacted global equity markets, including the BSE Sensex and NSE Nifty, and international oil prices. Several experts have warned that global inflation levels could rise as a result of the Russian invasion of Ukraine.
The review could affect the timing of India’s largest mega public offering, which formed the bulk of the country’s asset sale program aimed at eliminating the fiscal deficit for the year to with March 31, 2022.
Furthermore, the postponement of the LIC’s IPO could affect bond prices and also negatively affect the rupee, which is teetering under pressure from the Russian invasion of Ukraine.
LIC IPO: What Do Analysts Say?
dr. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said of a likely slowdown in India’s mega IPO: “The current weak global market environment is not the ideal setting for a mega IPO of the size of LIC. The government will likely postpone it until FY23. Delay is better than an IPO that flops.”
LIC IPO: stage ready for market debut
Last week, the Union cabinet chaired by Prime Minister Narendra Modi allowed up to 20 percent foreign direct investment (FDI) via automatic route in IPO-bound LIC with the aim of facilitating the divestment of the country’s largest insurer.
Life Insurance Corporation set the stage for the largest-ever public offering in the country on Feb. 13 and filed draft documents with capital market regulator Sebi on Feb. 13 for the sale of a 5 percent stake by the government for an estimated Rs 63,000 crore.
According to the draft red herring prospectus (DRHP), the embedded value of LIC, which is a measure of consolidated shareholder value in an insurance company, has been pegged at approximately Rs 5.4 lakh crore by the international actuarial firm Milliman as of September 30, 2021. advisors.
The public issuance of LIC would be the largest IPO in the history of the Indian stock market. Once listed, LIC’s market valuation would be comparable to top companies such as RIL and TCS.
So far, the amount mobilized from Paytm’s IPO 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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