The government would closely observe the market before taking call on the timing of the initial public offer of Life Insurance Corporation, department of investment and public asset management secretary Tuhin Kanta Pandey said on Friday. The statement came amid heightened uncertainty over whether the mega issue would hit the market in the current fiscal as was planned before the unforeseen event of Russia-Ukraine war.
The East European crisis has made markets across the globe choppy. Volatility has persisted in the Indian markets also over the last many sessions.
The 30-share BSE Sensex opened weak and slumped over 1,200 points to the day’s low of 53,887.72 on Friday before it recouped some losses to close at 54,333.81, down 1.40%. Similarly, the broader NSE Nifty slumped 252.70 points or 1.53% to end at 16,245.35.
Speaking at an event organised by the Competition Commission of India, Pandey vowed to “keep the best interest of the investors and stakeholders in mind”, but hinted that the current dynamic situation might require a change in the timing of the issue. “That (to come out with the IPO by March-end) has always been our desire, but now with this crisis (Russia-Ukraine) which has come up, we have to be watchful and make our strategy accordingly” Pandey said.
Pandey said the government would be guided by professional advisers on the IPO. “(LIC IPO) is a very important event. It is also one of the important objectives of the government to have wider public ownership (of LIC),” he said.
FE reported earlier that the IPO, tipped to be the biggest ever in the Indian market, is likely to be postponed given the deteriorating geopolitical situation and the consequent choppy state of the markets. The government is keen to ensure that state-run insurer’s debut is a successful one.
The government’s rethink is understandable, given that sticking to the March-end target could now require the shares to be priced lower than anticipated. This then might not fetch the government the estimated Rs 65,000-Rs 70,000 crore for its 5% stake in the insurer. Only in a good market, experts say, would it be possible to attract a market capitalisation of Rs 13-14 lakh crore. LIC’s embedded value is pegged at Rs 5.4 lakh crore.
Even ahead of this the Fed’s imminent tightening had resulted in foreign portfolio Investors (FPI) turning sellers of Indian stocks. FPIs have sold some $15 billion worth of shares in the last five months having pulled out close to $10 billion in January and February. Having hit 61,765.59 in October, the Sensex has come off to levels of 54,300.
LIC IPO proposal has led to opening of as many one crore new demat accounts in the country.
