Do you see the LIC IPO being postponed due to the Ukrainian crisis?

As of now the government is not talking about that but there are a lot of risks to the IPO. There is pressure of the Ukrainian crisis. Oil has crossed $100/bbl and rupee went beyond Rs.76/$. FPIs have taken out close to $22 billion since October last year and $29 billion in FY22 so far. On top of all this, the algo case is also quite disconcerting. In this situation, it is obvious that questions are being raised if LIC IPO can really happen in March this year.

Interestingly, the finance minister Nirmala Sitharaman and Tuhin Kant Pandey of DIPAM have indicated there is no change in IPO plans of LIC. However, the FM has added that the volatility in the markets due to Russia and Ukraine was being closely watched. Considering the size of the LIC IPO at close to $10 billion, robust FII participation and strong market sentiments would be the key, so that may finally hold the key to the success of the IPO.

The problem is that the government has to make a success of the LIC IPO to boost its already truncated disinvestment revenues. In Budget 2022, government had cut its disinvestment target for FY22 from Rs.175,000 crore to Rs.78,000 crore. Ironically, only Rs.13,000 crore has been collected till date. For disinvestment to be meaningful, Rs.65,000 crore IPO of LIC is inevitable and it has got to be a real success.

As of now government is continuing with roadshows for the LIC IPO, but the feedback from global investors will be the key. The geopolitical situation looks unlikely to improve in next one month, so LIC IPO cannot really avoid the conflict. Government has to close the LIC IPO by mid-March so as to list the stock and get funds in this year. For now, the government is looking confident but the real picture will only emerge after the outcome of roadshows.