The economic fallout from the Russia-Ukraine war has caused India to take a wait-and-watch approach on a scheduled stake sale of state-owned Life Insurance Corporation (LIC).
According to Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey, the government hopes to launch the initial public offering as soon as stock market volatility sparked by the Ukraine crisis recedes, Business Standard reports.
India’s largest insurer had applied for a draft red herring prospectus with the stock market watchdog Securities and Exchange Board of India on February 13. It received the regulator’s clearance within a month, making it one of the fastest turnarounds in India’s corporate history.
The government seeks to divest a 5% stake to raise 700 billion rupees ($9.16 billion) in what would be the highest initial stake sale offer in India’s corporate history. Tech company Paytm’s stake sale offer of 183 billion rupees is India’s current largest ever.
The Indian government had initially planned to wrap up the stake sale before the March 31 end of the fiscal year, but after the outbreak of the Ukraine crisis and a foreign exodus from the Indian exchange, it opted to wait.
Indian capital markets have faced choppy sessions since the outbreak of the Ukraine war, which has pushed global crude prices to record highs. Foreign portfolio investors have already withdrawn over one trillion rupees from the stock market since the invasion.
The insurer’s top management has been in talks with global and domestic fund managers to apprise them of the offer and the company’s future prospects. The share sale is being handled by 10 investment lenders, led by Kotak Mahindra Bank and Axis Capital.
LIC is a household name in India and has over 250 million policyholders. Its huge market share of the local insurance industry has already created significant buzz among retail investors.
The Indian government earlier successfully sold state-owned airline Air India to salt-to-software conglomerate Tata Group and its entire stake in the steel company Neelachal Ispat Nigam, again to Tata company – Tata Steel Long Products.