The wait for LIC’s mega-initial public offering (IPO) in India could be getting longer as the ongoing war between Russia and Ukraine is impacting global stock markets, including Sensex and Nifty, those in the know said.
News18.com has learned from its sources that officials are in the process of moving the state-run insurer’s listing to the next quarter. However, a formal announcement is still awaited. According to sources, a meeting will be held this week for a likely reassessment of the LIC list.
Earlier, Finance Minister Nirmala Sitharaman revised the LIC’s IPO launch date in light of the evolving geopolitical situation. The IPO of the LIC was expected to hit the market in March.
Sitharaman had said that she would ideally like to go through with it as it had been planned for a while on purely Indian considerations. “But if global considerations warrant that I have to look at it, I wouldn’t mind looking at it again,” she said.
Meanwhile, the government continues 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.
LIC IPO: Muted Interest from Anchor Investors
A Bloomberg report said the LIC’s insurers, according to the people, have seen muted interest during early meetings with potential anchor investors. Many fund managers have been wary of making big commitments amid market volatility, people said.
LIC IPO: Why the March timeline?
The government expected to collect Rs 63,000 crore by selling a 5 percent stake in the life insurance business to meet the limited divestment target of Rs 78,000 crore in the current fiscal year. If the initial public offering (IPO) is delayed until next fiscal year, the government would miss the revised divestment target by a huge margin. So far, the government has raised Rs 12,030 crore through the divestment of CPSE and the strategic sale of Air India this fiscal year.
The government had previously projected to collect Rs 1.75 lakh from divestments in 2021-22.
LIC IPO: What Do Analysts Say?
Commenting on a likely slowdown in India’s mega IPO, Arijit Malakar, head of retail equity research, Ashika Group said: “The current geopolitical issue between Russia and Ukraine is making global equity markets jittery. Indian markets also reacted negatively to this development. and corrected nearly 11 percent from their all-time high, so current market volatility is not conducive to LIC’s IPO and the government will most likely postpone the issuance until next fiscal year.A group of ministers are likely to meet on March 4 to decide whether to go public of LIC can be postponed by at least two months.”
Malakar said market sentiment is weak at the moment, making it difficult to sail on this mega IPO. “Even the investment bankers involved in the IPO have informed the government that the current volatility is not conducive to an IPO of this magnitude. Making the IPO a success will require strong investor support, so extending the IPO timeline by a month or two is expected to make things more favorable for this mega-issue. In general, in a highly volatile market, investors tend to play it safe and forgo new investments. So the stock market needs to be stable so that investors can gain the confidence to invest in LIC IPO,” he added.
Piyush Nagda, head of investment products at Prabhudas Lilladher, said: “LIC IPO is of gargantuan size and could be a serious challenge to be fully subscribed in the current market situation. A share of 35 percent is reserved for retail, so at Rs 65,000 crore of assumed mobilization, this will translate to Rs 22,750 crore for the Retail category. Investors are staring at huge market value losses in their portfolio and are currently less excited about LIC’s IPO.”
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