The group of ministers tasked with decisions relating to strategic disinvestment is expected to soon consider the pricing of LIC’s initial public offer (IPO), people with knowledge of developments told ET. A decision on the timing of the offer is likely to be taken after considering all inputs, they said.
The country’s biggest life insurer had filed the DRHP for a 5% stake sale by the government on February 13. The issue was initially planned for this month and market experts had pegged its size at around Rs 65,000 crore.
“Even the smaller initial public offers in the pipeline have been put on the backburner. We are seeing no public listings anywhere in the world, and this is such a big IPO that we need all the appetite in the market to absorb this,” a top banker involved with the share sale told ET.
‘Large Investors Sceptical’
“Large investors are very sceptical and even subscription to the retail portion will be a challenge because the market sentiment is very bad. We have suggested to the government that it is better to wait.”
The BSE Sensex rallied 2.3% on Wednesday but the Ukraine crisis continues to loom large with oil perched at over $120 a barrel.
Government sources told ET that the process for the IPO will continue. “The next process is to approve the price band, which will be done by the alternative mechanism, and subsequently decide on the timing of the issue,” said an official.
The alternative mechanism includes finance minister Nirmala Sitharaman, commerce and industry minister Piyush Goyal and transport minister Nitin Gadkari.
“After this, the LIC board will meet again to approve the price band. As per existing regulations, a company has one year from the date of approval of the DRHP to hit the primary markets,” said the official cited above.
