Ukraine War Likely To Derail LIC IPO, India's Disinvestment Target
LIC's IPO is crucial to meet the scaled-down disinvestment estimate to Rs 78,000 crore.
India is on track to miss its scaled-down divestment target as the government is considering deferring the initial public offering of Life Insurance Corp. to the next fiscal after Russia’s invasion of Ukraine amplified stock market volatility.
The government is closely monitoring the dynamic situation, an official at the Department of Investment and Public Asset Management told BloombergQuint. The official spoke on the condition of anonymity as he is not authorised to speak to the media.
India aims to raise more than Rs 60,000 crore from the LIC IPO, making it the nation’s biggest maiden offer. And it’s crucial to meet the revised disinvestment estimate of Rs 78,000 crore, down from the budget target of Rs 1.75 lakh crore. The government has so far only mopped up Rs 12,423.7 crore from sale of its shares in companies, including Rs 2,700 crore from Air India's privatisation and Rs 3,994 crore from sale of SUUTI stake in Axis Bank Ltd.
Russia’s invasion of Ukraine, however, increased uncertainty as global stocks tumbled and commodity costs soared. Indian equities, already seeing a selloff from foreign investors since October, fell even more. U.S. and European sanctions on Russian financial institutions have added to worries.
With the current sanctions, foreign investors may find it difficult to withdraw securities, the DIPAM official quoted earlier said.
Queries emailed to the Ministry of Finance and DIPAM remained unanswered.
The government has also pushed Bharat Petroleum Corp.'s privatisation to the next financial year. "Expression of interests have been received (for BPCL). The shortlisted bidders have been allowed to conduct due diligence. The timeline is dependent on successful outcome of different stages of transaction," the government said in a Lok Sabha response on Dec. 13.