Tomorrow will be a crucial day for the future of LIC’s IPO. A group of ministers would meet to decide whether state insurer LIC’s initial public offering (IPO) can be deferred to next year in the wake of stock market volatility as a result of ongoing war between Russia and Ukraine, reported Business Standard.
The group comprising Finance Minister Nirmala Sitharaman, Road Transport Minister Nitin Gadkari, and Commerce Minister Piyush Goyal is likely to meet on March 4 and 5 to take aa final call on the timeline of the LIC's IPO since merchant bankers have advised the current volatility is not conducive for an IPO of this scale, officials said, BS reported.
The ministerial panel was meant to decide on the valuation, issue size, and pricing of the shares of LIC while the largest insurer has set its sights on the largest listing on Indian bourses.
The IPO requires necessary support from investors, officials said. Pushing the IPO timeline by a month or two can make the situation far more conducive for the public listing, merchants bankers said this in their interactions with the Centre, wrote Business Standard.
However, the government is quite keen to roll out the IPO in the current year and is hoping that the situation will improve in coming weeks, but at the same time, it does not “want to undersell LIC even at perception level”, said one of the officials.
In high volatility, investors tend to play safe. For a listing of a company like LIC, the government wants the markets to be stable, so that investors get confidence to invest, officials said.
India VIX, an indicator to assess volatility in the market and also referred as fear gauge, stands at 28-29 as compared to a normal of 14-15, making investors jittery, officials added.
The finance minister had on Tuesday said the government was open to reviewing the IPO plans due to prevalent market conditions. “I wouldn't mind looking at it again,” Sitharaman had told Business Line. “Now, there is a full-scale war. Therefore, I need to go back and review the situation.”
LIC had filed the draft red herring prospectus (DRHP) with Securities and Exchange Board of India (SEBI) on February 13. The market regulator’s approval for the DRHP is expected to be received on March 7-8, officials quoted above said.
The Centre is looking to sell its five per cent or 316 million shares in LIC through the IPO. The embedded valuation has been estimated to be ₹5.39 trillion.