LIC IPO may get pushed to next fiscal amid market volatility

LIC IPO (Representative image)

The much-awaited initial public offering (IPO) of state-run insurance giant Life Insurance Corporation of India (LIC) could be pushed to the next financial year because of market volatility due to the Russia-Ukraine conflict, The Economic Times reported on March 3.

The country's biggest life insurer had filed the draft offer document for a five percent stake sale by the government on February 13. LIC IPO, touted as the country's biggest ever public offer, was initially planned for this month.

The process for it is already on and we are prepared to go ahead but when a war of this magnitude is happening, a review is certainly required, the report said quoting a government official, who was referring to the Ukrainian crisis and the upheaval it has caused in global financial markets.

Also Read: Stay away from LIC IPO, the firm may not command premium valuations on listing: Vaibhav Agrawal of Teji Mandi

The issue pricing is yet to be decided, with some estimates pegging the offer size at about Rs 63,000 crore. There is concern that such a big sale may be difficult in the current volatile market and the sanctions have hammered the Russian market.

Brent crude prices crossed $110 a barrel on March 2, the Sensex fell 1.38 percent, bond yields rose, and the rupee weakened further against the dollar. The military conflict in eastern Europe has sent jitters to markets around the world.

"Roadshow with some sovereign funds are lined up in this week and next," the official said. "The government is in constant dialogue with all stakeholders, including merchant banks managing the issue,'' he added.

As per the draft document, up to 316.2 million equity shares will be on tap through the offer for sale, representing five percent of LIC's equity. There will be no fresh issue of shares. LIC's embedded value stood at Rs 5.39 lakh crore on September 30, 2021.