Mumbai : Indian state-run banker advising Life Insurance Corporation (LIC) Its IPO has prompted the government to postpone the launch of the stock offering in the wake of market shocks caused by Russia’s invasion of Ukraine, two sources familiar with the talks told Reuters.
In what will be the biggest stock offering in India, the government plans to raise around $8 billion by selling 5% LIC’s stake This month before the end of the financial year on March 31. The offer also assumes significance as it will help New Delhi raise funds for budget expenditure.
But two bankers familiar with the discussion said Investment Bank were pressuring the government over the deal and at a recent closed-door meeting raised concerns for delaying the IPO, saying market conditions were no longer favorable due to volatility caused by Russia-Ukraine tensions.
If the IPO is delayed, it would stifle a growing list of planned offerings as the war wreaks havoc on investors’ appetite for riskier assets.
Bankers have told the Indian government that it would make sense to launch LIC’s stock offering in the coming months when investors are more confident, said a banker who is directly involved in the talks.
“We have conveyed our concerns… a decision on the timing of the (revised) IPO is likely by this week,” the banker said.
India’s finance ministry and LIC did not immediately respond to requests for comment.
Last month, top officials of the government and LIC launched several virtual road shows to spur interest in the stock offering, but the Russia-Ukraine crisis has now started to weigh.
Another banking source told Reuters that foreign investors are busy reworking their portfolios in view of the market volatility and do not have time to evaluate LIC prospectus.
After getting upbeat last week on LIC’s prospects despite deteriorating market conditions, India’s Finance Minister Nirmala Sitharaman told local media on Tuesday that the government was ready to review IPO plans due to the prevailing market conditions.
“I wouldn’t mind seeing it again,” Sitharaman said in an interview with Business Line newspaper, referring to the timing of LIC’s offer.
“Now, there is a full-scale war. So, I need to go back and review the situation.”
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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