The government may postpone the Initial Public Offering (IPO) of Life Insurance Corporation of India (LIC) till the next financial year. The reason behind this is the turmoil in the market due to the Russia-Ukraine war.
The government may postpone the Initial Public Offering ( IPO ) of Life Insurance Corporation of India (LIC) till the next financial year. According to the report of Economic Times , the reason behind this is the turmoil in the market due to Russia -Ukraine war. The country’s largest insurance company had on February 13 filed a draft offer document for the government to sell five per cent stake.
LIC’s initial public offer is expected to be the largest IPO in the country. Initially it was planned to bring it in this month. According to the report, a top government official told ET that the process is already underway and they are ready to go ahead.
He further said that but when a war of this level is taking place, then there is definitely a need for review. He pointed to the crisis in Ukraine and the resulting uncertainty in the global market. The issue price is yet to be decided.
IPO may be around Rs 63,000 crore
According to some estimates, the size of the offer is being said to be around Rs 63,000 crore. There is concern that such a huge sale will be difficult for the market which is currently facing turmoil.
Brent crude prices crossed $110 a barrel on Wednesday. At the same time, a fall of 1.38 percent has been seen in the Sensex. Whereas, bond yields have risen. And the rupee has weakened more against the dollar.
The Sensex has seen a decline of about 10 percent from the high of 61,000 points in mid-January. This is because of the large number of exits of foreign portfolio investors. According to the report, another official privy to the talks said that the government will continue to organize roadshows and will also continue talks with potential anchor investors before taking a final call on the timing of the IPO.
Negotiations on with some sovereign funds
Abu Dhabi Investment Authority (ADIA) and Singapore Government Investment Corporation are among the top funds the government is trying to bring in as anchor investors.
According to the report, the official said that talks with some sovereign funds are going to happen in this and next week. He said that the government is in constant dialogue with all the stakeholders, including the vendor banks managing the issue.
According to the draft document, 316.2 million equity shares will be placed through the offer for sale, which is 5 per cent of the equity of the insurance company. There will be no fresh issue of shares. The embedded value of LIC is present at Rs 5.39 lakh crore as on 30 September 2021.
