Government wishes to IPO of LIC in this financial year, but under review
The government will decide on the initial public offering (IPO) of Life Insurance Corporation (LIC) in the “best interest of investors”, a senior official said on Friday, on the heels of the finance minister, who indicated that the Center was open for review. Ukraine crisis because of the plans escalation.
Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), said the government wants to launch the IPO of the state-owned life insurance company in the current financial year, but it is a “dynamic situation”.
Meanwhile, LIC’s employees union has decided to mount pressure against the government’s IPO plan.
This comes a day after a Reuters special report, in which bankers advised LIC on its IPO, to defer the launch of the stock offering in view of market shocks caused by Russia’s invasion of Ukraine, according to two sources. The government was pushed. with talks.
After getting upbeat last week on LIC’s prospects despite deteriorating market conditions, Finance Minister Nirmala Sitharaman on Tuesday told the media that the Center has an open mind on the timing of the IPO launch due to the prevailing market conditions.
“I wouldn’t mind seeing it again,” Ms 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.”
In India’s most prominent stock offering, the government plans to raise around $8 billion by selling a 5 per cent stake in LIC this month before the fiscal year ends on March 31. The offer is also significant as it will help New Delhi raise funds for the budget. Expenditure.
However, the timing of LIC share sale may be reconsidered in view of market volatility due to Ukraine-Russia war.
“There are some unforeseen events, which have just happened. We are watching the market closely, and of course, whatever the government will do, we will do it in the best interest of the investors and the IPO,” the secretary of DIPAM said. ,
Speaking at the Seventh National Conference on Economics of Competition Law, 2022, he also said that the government aspires to develop the IPO of the state-owned insurance company in this financial year itself.
The financial year ends on 31 March.
“It has always been our desire, but now with this crisis that has come to the fore, it is also a very dynamic situation. We are watching (the situation) closely, and since you know you are dealing with the market all the time. So, we have to be cautious and plan our strategy accordingly,” Mr. Pandey emphasized.
He said that professional advisors guide the government and whatever decision will be taken will be in the best interest of investors and stakeholders.
“LIC is not really a strategic investment, but yes, it is a very important event, as LIC is a very old organization for wide public ownership. This is also one of the important objectives of the government. We brought in many listings. There are RailTel, IRCTC, among others in recent times,” said the Secretary, DIPAM.
He also said that one crore new demat accounts have been opened due to LIC IPO proposal.
“LIC alone has brought in something like one crore new demat (dematerialized) accounts. Now the demat accounts have gone up to over 80 million, and there has been a tremendous amount of new energy in the case of retail investors as well,” he said.
A sell-off in global markets following Russia’s invasion of Ukraine and subsequent Western sanctions has alerted companies to IPOs, with some putting their plans on hold. Chinese fashion retailer Sheen, GCP co-living REIT in London and German prosthesis maker Otobock have put their IPO plans on hold.
If LIC’s IPO is delayed, it will join the growing list of planned offerings, as the war wreaks havoc on investors’ appetite for riskier assets.