LIC IPO Likely To Be Delayed As Investors 'Not In A Position' To Participate Amid Russia-Ukraine Conflict

Govt planned to sell 5% interest in LIC by end of this fiscal, which might have brought in over Rs 60,000 cr. The IPO would have aided in meeting this fiscal's Rs 78,000-cr disinvestment objective.

The Government of India had planned to complete the LIC share sale by the end of 2021-22 fiscal | Photo: Getty

Mumbai: The economic repercussions of the Russia-Ukraine conflict has prompted India to postpone a planned stake sale in the state-owned Life Insurance Corporation (LIC) of India to next fiscal, sources in the know of the development told ABP News.

The government has decided to postpone the massive initial public offering (IPO) of LIC until the next fiscal year after the investment bankers to the issue requested the government not to rush with India's biggest IPO in the middle of the ongoing Russia-Ukraine conflict, which has dampened fund managers' enthusiasm in the public issue.

Sanctions imposed on Russia for its invasion of eastern Ukraine is seen as a deterrent to foreign institutional investors (FIIs) from participating in the LIC's upcoming IPO, the sources said.

Russia has received a barrage of coordinated sanctions from the United States and Europe for its actions in Ukraine, including the expulsion of numerous banks from the financial messaging platform SWIFT, causing investor finances to tighten.

Sanctions have been a source of concern for global investors.

The US investors with stakes in the struggling Russian market are "not in a position to remove any securities and invest them in LIC", the sources pointed out.

As a result of the current crisis, crude oil prices are rising, causing inflation and instability in Indian markets.

Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey is in favour of "wait and watch approach for mega IPO of LIC". According to DIPAM, the government plans to undertake the initial public offering as soon as stock market volatility caused by the Ukraine conflict subsides.

The government was planning to sell a 5 per cent interest in LIC this month, which might have brought in more than Rs 60,000 crore for the government. The IPO would have aided in meeting this fiscal's reduced disinvestment objective of Rs 78,000 crore.

On February 13, India's largest insurer applied to the Securities and Exchange Board of India (SEBI) for a draft red herring prospectus. It got regulatory approval in less than a month, making it one of the quickest approvals in Indian corporate history.

The Indian government had planned to complete the share sale by the end of the fiscal year on March 31, but due to the onset of the Ukraine crisis, and a foreign exodus from the Indian exchange, it opted to wait.

Since the beginning of the Ukraine crisis, which has driven global crude prices to record highs, Indian capital markets have seen bumpy sessions. Foreign portfolio investors have already withdrawn over 1 trillion rupees from the stock market since the invasion.

ABP Live approached the LIC for an official comment, but the spokesperson refused to speak on the matter.