state owned insurer life insurance corporation of India (LIC) IPOThe markets, which were likely to hit the market in March, are on wait and watch mode amid high market volatility due to geopolitical tensions, sources told Moneycontrol.com.
Yesterday, Finance Minister Nirmala Sitharaman had said that the government would go ahead with the planned initial public offering (IPO) of Life Insurance Corporation of India.LIC) despite market volatility due to geopolitical developments.
Moneycontrol.com reported that the government is keeping a close watch on global developments due to the Ukraine-Russia tensions and the resulting market volatility.
Sources also said that the government has till the first week of March to take a decision on whether Life Insurance Corporation’s upcoming initial public offering (IPO) will go ahead as planned. Sources say, “The impact on LIC’s IPO plan is not visible as of now.”
Government sources also claim that India is prepared to deal with any situation arising out of global growth, and they do not expect a serious impact of the crisis on the Indian economy.
Responding to whether Russia’s invasion of Ukraine could have consequences and add to uncertainty, sources suggest that geopolitical tensions could potentially raise interest rates and inflation as well but are still manageable. can.
The government is planning to sell its 5 per cent stake in LIC for around Rs 65,000 crore, India’s biggest such issue, valued at around Rs 13 lakh crore. LIC is likely to be listed in the local markets before the end of March 2022.
The insurance giant has filed a draft letter for sale of its shares with the market regulator. The market is expecting the approval soon and the public bidding is likely to begin by mid-March. The government, which owns the entire stake in the company, is keen to close the sale by the end of this financial year despite adverse markets.
Moreover, foreign investors have been going through a bearish phase on India for some time now. In the current calendar year, they have pulled out around Rs 52,500 crore from equity, data available in NSDL shows.
The government is racing to complete the IPO by the end of March to meet its 2021/22 fiscal deficit target of 6.4 per cent of gross domestic product (GDP), which is dependent on it raising around Rs 60,000 crore. ($8.03 billion) raised. Issue.
New Delhi reduced its disinvestment and privatization plans from Rs 1.75 lakh crore to Rs 78,000 crore for the financial year ending March 31. So far it has raised just Rs 12,000 crore from stake sale in state-run companies as it failed to privatize, including refiner Bharat Petroleum Corp Ltd and two banks.
The investor roadshow for the offering, which is set to be the third largest insurance IPO globally at $8 billion, began earlier this week, Reuters reported.
SBI Caps, Citigroup, Nomura, JP Morgan, Goldman Sachs, five other domestic and international investment banks are the book-running lead managers to the deal.
LIC’s upcoming offering has battered stocks of other listed Indian insurance companies as investors have reduced their holdings to make room for the state-owned giant, fund managers and analysts.
The 66 year old company dominates the insurance sector in India with over 280 million policies. It was the fifth largest global insurer in terms of insurance premium collection in 2020, the latest year for which figures are available.
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