The government was looking to sell 5 per cent stake in Life Insurance Corporation (LIC) this month, which could have fetched over ₹60,000 crore to the exchequer. 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.
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 government’s disinvestment plans. In a highly volatile market, investors tend to play safe and refrain from making fresh investments.
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 public issue would be the biggest IPO in the history of the Indian stock market. Once listed, the company’s market valuation would be comparable to top companies like RIL and TCS.
Vijay Singhania, Chairman, TradeSmart said the war is now going on in a region where nuclear power plants are operational and any mishap will be disastrous for mankind. For the government, a few months’ delays would not matter much given the times we are living in.
Most successful IPOs always come in Bull Run in the stock market. Policy makers may defer this for now and bring it on next fiscal year. IPOs generally come in low rates scenarios. So, now there is very little room to adjust the LIC IPO in the coming time.
The government is likely to miss its revised disinvestment target by a huge margin. So far, the government has raised about ₹12,000 crore through CPSE and Air India disinvestments this fiscal.
Complete News Source : MINT
