The country’s biggest life insurer had filed the draft offer document for a 5% stake sale by the government on February 13. The initial public offer (IPO), expected to be the country’s biggest ever, 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,” a top government official said, referring to the Ukrainian crisis and the upheaval it has caused in global financial markets. The issue pricing is yet to be decided, with some estimates pegging the offer size at about ₹63,000 crore. There is concern that such a big sale may be difficult in the current volatile market. Brent crude prices crossed $110 a barrel on Wednesday, Sensex fell 1.38%, bond yields rose, and the rupee weakened further against the dollar.
Sensex down 10% from mid-Jan Peak
The Sensex is down nearly 10% from its mid-January peak of over 61,000 as foreign portfolio investors have flooded the exits.
Another official aware of deliberations said that the government will continue to hold roadshows and engage with potential anchor investors before taking a final decision on the timing of the IPO. Abu Dhabi Investment Authority (ADIA) and Govt of Singapore Investment Corp are among the top funds the government is trying to rope in as anchor investors.
“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.”
As per the draft document, up to 316.2 million equity shares will be on tap through the offer for sale, representing 5% of the insurer’s equity. There will be no fresh issue of shares. LIC’s embedded value stood at ₹5.39 lakh crore on September 30, 2021.
