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HomeMoneyDelay in LIC IPO launch? Russia-Ukraine crisis

Delay in LIC IPO launch? Russia-Ukraine crisis

We all know that Russia’s invaded Ukraine last week and in this situation, the Indian markets have been very volatile, as have other markets, and government officials are afraid that foreign and domestic investors may be unwilling to buy shares in the insurance company.

And due to the current state of war, the national government may reconsider the date of Life Insurance Corporation of India’s initial public offering (IPO), which is set to take place this month. Finance Minister Nirmala Sitharaman told Bloomberg in an interview, “Ideally, I’d want to go forward with it since we’d planned it for some time based only on Indian concerns.” But if global factors need me to look at it again, I wouldn’t mind doing so.”

The assessment of the LIC IPO launch is thought to have an influence on the timing of the massive public offering, India’s largest, which made up the majority of the country’s $10.4 billion disinvestment programs targeted at reducing the fiscal deficit for the fiscal year ending March 31, 2022.

lic ipo

The Centre had already specified March as the timeframe for the launch of the LIC IPO, and its IPO paperwork was submitted on February 13.

Last week, the Union cabinet approved a policy adjustment permitting up to 20% foreign direct investment in LIC, with the goal of expediting the state-run insurer’s listing.

Meanwhile, officials in the Finance Ministry informed India Today that the Centre would meet this week to evaluate and create a plan of action for the launch of the LIC IPO.

When asked whether the delay in the LIC IPO will have an impact on the central government’s divestment plan, our finance minister Sitharaman responded, “When a private sector promoter makes this option, he merely needs to explain it to the company’s board.” But then I’d have to explain it to the whole globe.”

Impact of Russia-Ukraine crisis on Indian stock market and LIC IPO. 

Ukraine says all-out war with Russia is 'a possibility' | World News -  Hindustan Times

The geopolitical scenario may produce more disruptions in global supply chains, and inflation should be anticipated to remain elevated for a longer period of time. This might indicate a more aggressive policy response, including liquidity cutbacks and interest rate hikes by the Reserve Bank of India (RBI). “Higher interest rates would mean lower PE values for Indian shares,” Ask Investment Managers emphasizes.

It is concerned about increasing risk perception as a result of greater volatility and valuations. This is to be anticipated in any circumstance such as the current one. “A typical investor’ want to play very safe and not take risks in volatile market.” This might cause some withdrawals from the funds as well as some selling pressure. “The risk premium rises in the interim, lowering market prices,” argues Ask Investment Managers.

Furthermore, Russia’s inclusion in the emerging market basket, as well as sanctions and other factors, may result in the redirection or removal of funds in the event of extreme underperformance. If developing market funds have withdrawals due to predicted the Indian market may see selling pressures. And this all may create a situation where investors hesitate to participate in LIC IPO.

LIC IPO Details

The Life Insurance Corporation of India is a government-owned investment and insurance company. LIC is the only life insurance business in the Indian public sector that has a strong presence in both rural and urban regions. It has 8 zone offices and 113 divisional offices.

The Central Government intends to float Life Insurance Corporation of India (LIC) by the end of the current fiscal year as part of its ambitious disinvestment program.

LIC IPO: 10 things that policyholders, retail investors, employees should  know

The Life Insurance Corporation of India (LIC) has submitted its draft share sale prospectus with the capital markets regulator SEBI, opening the way for India’s biggest IPO (IPO). There is also a chance that the following listing on the stock markets, LIC would overtake Reliance Industries Ltd as India’s most valued listed business.

According to the draft red herring prospectus filed with SEBI, LIC intends to sell 316.25 million shares or nearly 5% of its overall stock base (Securities and Exchange Board of India). The LIC, which is 65 years old, has a total equity base of 6.32 billion shares.

The IPO is a pure offer for sale, which means that all revenues will go to the government to assist it to meet its disinvestment aim. The Indian government had expected the disinvestment earnings for this fiscal year at Rs 78,000 crore in the Union Budget, which was delivered earlier this month.

According to the offer agreement, a portion of the shares up to 5% of the offer would be allocated for workers. Similarly, another share of not more than 10% will be set aside for qualifying policyholders. These are Indian nationals who had LIC insurance on the day the draft red herring prospectus was released.

According to the prospectus, the IPO price will be established in due course, two days before the public offering opens. It also said that policyholders and workers may get a reduction from the price provided to the general public. A minimum of 35% of the offering will be set aside for individual investors.

While the LIC IPO is critical to the government’s revised disinvestment target of Rs 78,000 crore for this fiscal year, it remains to be seen whether the market is willing to absorb a mega issue at a time when equity markets are volatile due to a spike in inflation and rising interest rates globally. The cost of the problem will be crucial.

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The prospectus further said that the LIC’s embedded value is Rs 539,686 crore. The embedded value is a measurement used to assess the worth of a life insurance company; it is the sum of the present value of all future earnings from the current business and the net wealth of the owners. Last Monday, the Insurance Regulatory and Development Authority of India (IRDAI) approved the LIC IPO.

 

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