The wait for India’s mega initial public offering (IPO) of LIC may get longer as the ongoing Russia-Ukraine war has left its impact on global stock markets, including Sensex and Nifty, people with knowledge of the matter said.
News18.com has learnt from its sources that officials are in the process of shifting the listing of the state-run insurer to the next quarter. However, a formal announcement is still awaited. According to sources, meeting for a likely reassessment of LIC listing will be held this week.
Earlier, Finance Minister Nirmala Sitharaman already indicated review of the LIC’s IPO launch date in view of the evolving geopolitical situation. The LIC’s IPO was expected to hit the market in March.
Sitharaman had said, ideally, she would like to go ahead with it because it had been planned for some time based purely on Indian considerations. “But if global considerations warrant that I need to look at it, I would not mind looking at it again,” she said.
Meanwhile, the government is continuing with its roadshows for the public offering, informed a government official. The IPO of LIC is considered to be the largest public offering by any Indian company, and is touted to be a globally eyed public listing.
LIC IPO: Muted Interest from Anchor Investors
A Bloomberg report said that the LIC’s underwriters have seen muted interest during early meetings with potential anchor investors, according to the people. Many fund managers have been wary of making major commitments amid the market volatility, the people said.
LIC IPO: Why the 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: What do Analysts Say?
Commenting on a likely delay in India’s mega IPO, Arijit Malakar, head of retail equity research, Ashika Group, said: “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 and government is most likely to defer the issue to next fiscal year. A group of ministers is likely to meet on March 4 to decide whether the IPO of LIC can be deferred by at least two months.”
Malakar said, currently, the market sentiment is weak, hence it could be tough to sail on this mega IPO. “Even, the merchant bankers associated with the IPO advised the government that the current volatility is not conducive for an IPO of this large scale. In order to make the IPO success, strong support is required from the investors and thus stretching the IPO timeline by a month or two is expected to make the situation more favourable for this mega issue. Generally, in high volatile market, investors tend to play safe and refrain from making fresh investment. Thus, the equity market need to be stable, so that investors can get the confidence to make the investment in LIC IPO,” he added.
Piyush Nagda, head – investment products at Prabhudas Lilladher, said: “LIC IPO is of mammoth size and could face a serious challenge in getting fully subscribed in the current market situation. 35 per cent portion is reserved for retail, so at Rs 65,000 crore of assumed mobilization, it will translate into Rs 22,750 crore for the Retail category. Investors are staring at huge mark-to-market losses in their portfolio and are less enthusiastic for LIC IPO currently.”
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