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LIC IPO Likely to be Postponed Amid Russia-Ukraine War, Say Experts. Know Details

By: Aparna Deb

Last Updated: March 08, 2022, 11:20 IST

LIC IPO is pegged as the largest ever issue in the country

LIC IPO is pegged as the largest ever issue in the country

When will the LIC IPO hit the D-Street? Will India's mega IPO be delayed to the FY23 amid the ongoing Russia-Ukraine war which has made the equity markets jittery? Know what the government, market experts say

LIC IPO Date: When will the LIC IPO hit the D-Street? This is a question that has been on everyone’s mind for quite some time now. However, The government is expected to defer the mega initial public offering (IPO) of LIC to the next financial year as the ongoing Russia-Ukraine war has dampened fund managers’ interest in the public issue, market experts said. The mega IPO of the Life Insurance Corporation of India (LIC) is one of the most awaited financial events.

LIC IPO: Investor Interest is Key

The government will take a call on the IPO of the country’s largest insurer LIC in the “best interest of the investors”, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said.

“There are certain unanticipated events which have taken over right now. We are closely watching the market and certainly, whatever the government will do, we will do in the best interest of the investors and also the IPO,” Pandey said.

LIC IPO: Government on the Timing

Pandey said the government is guided by professional advisors and whatever decision is taken, it will be in the best interest of the investors and the stakeholders. He further went on to say that “LIC is not really any strategic investment but yes it is a very important event, as LIC being a very old organisation to wider public ownership. This is also one of the important objectives of the government. We have brought in several listings in the recent past like Railtel, IRCTC, among others.”

LIC IPO: Russia-Ukraine War to Delay IPO?

However, after the Russian invasion of Ukraine, increasing market volatility and uncertainties may push the government to postpone the IPO to next year, sources with the knowledge of the matter suggest.

“The current geopolitical issue between Russia and Ukraine makes the global equity markets jittery. Indian markets also reacted negatively to this development and corrected nearly 11 per cent from their all-time high. Thus, the current market volatility is not conducive for the LIC IPO and the government is most likely to defer the issue to next fiscal year,” Arijit Malakar, head of retail equity research, Ashika Group, said.

LIC IPO: What has a Volatile Market Scenario to do with an IPO?

In a situation such as this, where the market is highly volatile, investors refrain from making fresh investments. Piyush Nagda, Head – Investment Products at Prabhudas Lilladher, said: “Investors are staring at huge mark-to-market losses in their portfolio and are less enthusiastic for LIC IPO currently. The finance minister has indicated postponing LIC IPO due to uncertain global crisis as the Russia-Ukrain war might get elongated and its adverse effect is already visible on fuel and commodity prices.”

Finance Minister Nirmala Sitharaman too had indicated a review of the IPO in view of the evolving geopolitical situation.

LIC IPO: Crucial March Timeline?

The government was expecting to garner Rs 63,000 crore by selling 5 per cent stake in the life insurance firm to meet the curtailed disinvestment target of Rs 78,000 crore in the current fiscal. If the initial public offering (IPO) is deferred to the next fiscal, the government would miss the revised disinvestment target by a huge margin. So far, the government has raised Rs 12,030 crore through CPSE disinvestment and Air India’s strategic sale this fiscal. The government had earlier projected to garner Rs 1.75 lakh from disinvestment during 2021-22.

LIC IPO: About the IPO

The IPO of LIC is purely an offer-for-sale (OFS) by the government of India and there is no fresh issue of shares by LIC. The government holds 100 per cent stake, or over 632.49 crore shares, in LIC. The face value of shares is Rs 10 apiece.

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 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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first published:March 08, 2022, 09:00 IST
last updated:March 08, 2022, 11:20 IST