India Planning LIC’s Mega IPO by May After Markets Calm Down, Sources Say
The IPO, which was set to launch before end of March, forms a key part of the Modi government’s plan to divest state assets.
(Bloomberg) -- India is looking at a mid-May timeline for launching the mega initial public offering of its largest insurer with hopes that the market volatility triggered by Russia’s invasion of Ukraine will subside, according to people familiar with the matter.
Life Insurance Corp.’s published embedded value will be valid for the IPO until May as per rules, said the people, who declined to be named as the information is not public yet. A delay beyond that would mean LIC would have to re-calculate the embedded value, a key valuation gauge for insurance firms, based on the latest financials, they said.
The IPO, which was set to launch before end of March, forms a key part of Prime Minister Narendra Modi government’s plan to divest state assets to fund a yawning budget deficit. With market swings triggered by the war, what could be the country’s biggest IPO was delayed into the next financial year, Bloomberg News reported earlier this month.
A market volatility index for India around 15 will be a comfortable level for the government to launch the IPO, one of the people said. India NSE Volatility Index was at about 26 in Mumbai on Monday, higher than an average of 17.9 in the past year. It touched the highest level this fiscal year at 31.98 on Feb. 24.
A Finance Ministry spokesman couldn’t be immediately reached for a comment.
The government had sought to raise as much as 654 billion rupees ($8.5 billion) from selling a 5% stake in the insurer. Plans for the IPO were first announced by Finance Minister Nirmala Sitharaman in February 2020, but was deferred due to the pandemic.
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