InvestorQ : Is it true that the LIC IPO is getting postponed to the next financial year?
rhea Babu made post

Is it true that the LIC IPO is getting postponed to the next financial year?

Riya Dwivedi answered.
1 year ago

Now, with every passing day, that is starting to look like a foregone conclusion. This was something people were anticipating but nobody wanted to say it publicly that LIC IPO would get postponed. This week, even Nirmala Sitharaman admitted that government may have to do a rethink the LIC IPO dates. Initially, the government was confident of doing the IPO in the second week of March and listing it but Russia appears to have spoilt the party.

Finance Minister Nirmala Sitharaman gave a reasonably strong hint when she said that the emerging global situation may warrant a relook at the IPO timing. It was just short of saying that the IPO had already been pushed off to the next fiscal year. The LIC IPO was a work in progress for nearly the last 2 years and Milliman Advisors had submitted the embedded valuation report just recently. DIPAM filed the DRHP with SEBI on 13-February.

What is interesting is that even as late as 22nd February, the finance minister had sounded very confident and had even gone to the extent of assuring market experts in Mumbai that the government would go ahead with the IPO as scheduled. What the government did not bargain for was the sharp deterioration in the geopolitical situation and the spike in crude, which now threatens to get worse with all the sanctions overhang.

LIC IPO is big by any standard. It will be nearly four times the size of the largest IPO to date, which was Paytm. In a nutshell, the stakes are just too high. The more prudent decision would be to postpone the IPO till the global situation improves. Government is apprehensive that the war, the shortages, the oil spike, and the sanctions would create a tough situation. If FIIs are already in sell-off mode, it does not make too much sense for the IPO now.

Also, with Russia being one of the major producers of commodities, it is likely to hit commodity markets across the world. The Russian markets are already hammered but the impact is likely to be felt far and wide. The final word may be still awaited but now it does look like putting off the LIC IPO to the next fiscal year would be the most prudent choice, especially with the stakes so high.