: Will govt defer LIC IPO over Ukraine crisis? #IndiaNEWS #Business New Delhi: The government is expected to defer the mega initial public offering (IPO) of LIC to the next financial year as the ongoing

Will govt defer LIC IPO over Ukraine crisis? #IndiaNEWS #Business
New Delhi: 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 Sunday.
The government was looking to sell 5 per cent stake in Life Insurance Corporation (LIC) this month, which could have fetched over Rs 60,000 crore to the exchequer.
The IPO would have helped meet the curtailed disinvestment target of Rs 78,000 crore this fiscal.
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 its 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.
Generally, in a highly volatile market, investors tend to play safe and refrain from making fresh investments. Thus, the equity market needs to be stable, so that investors can get the confidence to make the investment in the LIC IPO.
Echoing a similar sentiment, Tanushree Banerjee Co-Head of Research-Equitymaster, said the weak market sentiments, especially in the wake of the Ukraine-Russia war, have been a dampener for the IPO. While there is a possibility of the IPO getting postponed, the issue remains critical to the governments disinvestment plans.
Atanuu Agarrwal, co-founder, Upside AI, said in macro uncertainty, there is always a flight to safety to the dollar, away from riskier assets like emerging market equities. This means liquidity drying up in the domestic markets.
FPIs have anyway been net sellers in emerging markets for the past few months. While domestic investors have been net buyers and have staved off a market crash, given the size of the IPO of USD 9-10 billion, it will need sufficient liquidity to be absorbed. This means it will need FPI support government is cognizant of this and hence cabinet approved 20 per cent FPI investment in the LIC IPO under the automatic route, Agarrwal said.
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, LICs 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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