“Ideally, I’d like to go ahead with it because we’d planned it for some time based purely on Indian considerations,” Sitharaman said
“But if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again,” she said
New Delhi
India may take another look at the timing of Life Insurance Corp. of India’s initial share sale, the state-owned insurer, following Russia’s invasion of Ukraine, Finance Minister Nirmala Sitharaman said in an interview.
“Ideally, I’d like to go ahead with it because we’d planned it for some time based purely on Indian considerations,” Sitharaman said in an interview with Businessline.
“But if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again,” she said.
Bankers advising Indian state-run Life Insurance Corp (LIC) on its IPO have also 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 Reuter.
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. read more
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.
The review could impact the timing of the mega public offering, India’s largest, which made up the biggest portion of the country’s $10.4-billion asset-sale program aimed at stanching the budget deficit for the year through March 31, 2022.
The government had set a March deadline for the IPO and its IPO document filed on Feb. 13 put the insurance giant’s embedded value at Rs 5.4 trillion.
“When a private sector promoter takes this call, he has to only explain this to the company’s board,” she said, when asked if a call about delaying the IPO could be constrained by the government’s annual disinvestment targets. “But I would have to explain it to the whole world,” she said.