LIC IPO: Govt may review timing of share sale amid Ukraine-Russia conflict

Bankers advising Indian state-run Life Insurance Corp (LIC) on its IPO have pushed the government to defer the launch of the stock offering in the wake of the market jolt caused by Russia’s invasion of Ukraine, two sources familiar with the talks told Reuters.

In what will be the biggest stock offering in India, the government has plans to raise about $8 billion by selling 5% of LIC’s stake this month before the fiscal year ends on March 31. The offering is also seen critical as it will help New Delhi raise funds for budgeted spending.

But two bankers familiar with discussions said the investment banks on the deal were piling pressure on the government and raised concerns in a recent closed-door meeting to delay the IPO by saying market conditions were no more conducive due to volatility caused by Russia-Ukraine tensions.

If the IPO is delayed, it will add to the growing list of planned offerings being put on hold as the war dampens investor appetite for risky assets.

The bankers have told the Indian government that launching LIC’s stock offering would make sense in the coming months when investors are more confident, said one of the bankers, who is directly involved in the negotiations.

“We have communicated our concerns… it is likely that a decision on (revised) IPO timing can come by this week,” said the banker.

India’s finance ministry and LIC did not immediately respond to requests for comment.

Last month, the government and LIC’s top executives launched a slew of virtual roadshows to prop up interest in the stock offering, but the Russia-Ukraine crisis has now started weighing.

Foreign investors have been busy re-working their portfolios given the market turmoil and have had no time to evaluate the LIC prospectus, the second banking source told Reuters.

After sounding upbeat last week on LIC’s prospects despite deteriorating market condition, India’s finance minister, Nirmala Sitharaman, on Tuesday told local media the government was open to reviewing the IPO plans due to prevalent market conditions.

“I wouldn’t mind looking at it again,” Sitharaman said in an interview with Business Line newspaper, referring to the timing of the LIC offering.

“Now, there is a full-scale war. Therefore, I need to go back and review the situation.”