InvestorQ : How quickly do you expect the LIC IPO and the BPCL IPO to happen?
vaishnavi mhatre made post

How quickly do you expect the LIC IPO and the BPCL IPO to happen?

vidhya Laxmi answered.
1 year ago

While the time lines are not known, the government is planning both the mega issues in the first half of the next financial year FY22. At least, that is what you can decipher if you go by the words of Mr. K V Subramanian, the Chief Economic Adviser to the government of India. The CEA appears to be overly confident about the disinvestment target of Rs.175,000 crore in FY22 and does not see any challenges in meeting the target, unlike the previous year.

Subramanian expects the divestment drive for the year to be driven by Rs.100,000 crore LIC IPO. While there have been differences over whether the LIC would divest 10% or 5%, the CEA appeared quite confident of meeting the Rs. 1 trillion fund raising target from LIC alone. The CEA also made it a point to underline that the BPCL privatisation and LIC listing would be the big bang contributors and would account for over 80% of the divestment target.

While LIC would contribute Rs.1 trillion, the government is expected to raise close to Rs.70,000 crore or even more from the sale of its balance 52.98% stake sale in Bharat Petroleum Corporation Limited or BPCL. In fact, Subramanian has conservatively pegged the fund raising from BPCL at close to Rs.70,000 crore.

On the LIC front, the basic amendments to the LIC Act are done and approved during the last budget session. The government had set a target of Rs. 210,000 crore divestment revenues in FY21, but that was an exceptional year marred by the lag effect of COVID-19 and lack of appetite in the equity markets. This year is expected to be different.