LIC IPO augurs very well for govt’s credibility: Sridhar Sivaram

“The LIC IPO is positive news as far as I am concerned and it also gives credibility to the fiscal deficit numbers that the government has put out,” says , Investment Director, Enam Holdings.

LIC has filed its papers and now we are set for the biggest Indian IPO ever. What are your thoughts on this from the divestment standpoint? This is set to garner between Rs 62,000 crore and Rs 65,000 crore, helping to achieve the divestment target. What does this mean for some of the other PSU and divestment candidates in the pipeline?
This is very positive from the government standpoint. They are sticking to their commitment even though they have reduced the divestment target. They are being transparent in the last two years and most market participants and commentators have accepted that the transparency as far as the Budget and the outlook has significantly improved. The fact that they were committed to doing the LIC IPO this year and the fact that they have now filed the DRHP this augurs very well from their credibility standpoint.

We will see how the market you know reacts to it and what sort of valuation just got embedded. We are still awaited and this is a sector where there has been reasonable interest given the level of penetration. But for some of the private sector players, the valuations have actually got very stretched and we have seen some of them underperforming. This may be another PSU versus private bank story where if the valuations are good, people may want to look at this IPO versus the exposure in the overall life insurance scheme, This is a positive news as far as I am concerned and it also gives credibility to the fiscal deficit numbers that the government has put out.