Russia, Ukraine crisis may force govt to delay LIC IPO

By Team Newsable | First Published Mar 2, 2022, 4:10 PM IST

"Ideally, we would prefer to proceed as planned, but if Russia-Ukraine tensions continue to rise, the date will be reconsidered," a Finance Ministry official said.

The government is likely to reconsider the timing of the projected initial public offering (IPO) of Life Insurance Corporation of India (LIC) based on the impact of the Russia-Ukraine situation on Indian equity markets, according to official sources. "Ideally, we would prefer to proceed as planned, but if Russia-Ukraine tensions continue to rise, the date will be reconsidered," a Finance Ministry official said. In a meeting with stakeholders, the Finance Ministry will shortly decide on the timing of the LIC IPO.

Since Russia's invasion of Ukraine last week, Indian markets have seen volatility, as have other markets, and government officials are concerned that international and local investors may be hesitant to purchase shares of the insurance firm.

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The evaluation might influence the timing of the massive public offering, which is expected to be India's largest and is the main component of the country's asset-sale programme aimed at reducing the fiscal deficit for the fiscal year ending March 31, 2022. The government had said that the LIC IPO would be completed in the current fiscal year.

In previous month, Finance Minister Nirmala Sitharaman stated that the government would proceed with the LIC's initial public offering (IPO) since there is a lot of buzz and interest in the market for the LIC IPO, and that it will take place. The drafts red herring prospectus (DRHP) for the LIC IPO was submitted with market regulator SEBI on February 13. The government plans to sell up to 316.25 million shares, or about 5% of the life insurance conglomerate.

The LIC offering may help to ease investors' appetite for new stock offerings, since numerous Indian companies that launched last year are trading below offer prices owing to concerns about pricey valuations and imminent interest rate hikes by central banks.

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