Winning Bizness Desk
Mumbai. The massive uncertainty in the global and domestic financial market has emerged as a huge worry for the country’s biggest IPO of LIC. Market experts have strong reasons to believe that the government may postpone LIC's initial public offering (IPO) to the next financial year amid the Russo-Ukraine war, as the current situation has dented the interest of fund managers in the issue. The government considered selling five per cent stake in Life Insurance Corporation (LIC) this month, which was estimated to fetch around Rs 60,000 crore to the exchequer. The IPO was also expected to help meet its disinvestment target of Rs 78,000 crore for the current fiscal.
Geopolitical scenario not conducive
Arijit Malakar, Head of Retail Equity Research, Ashika Group, said, “The current geopolitical scenario is putting pressure on global equity markets due to the ongoing conflict between Russia and Ukraine. Indian markets have also reacted negatively to this and have broken almost 11 per cent from their all-time highs." may be postponed to the next financial year.
For the best interest of investors
However, a close source of the finance ministry has said that the Centre is closely watching the market situation and the government will decide on the initial public offer (IPO) of LIC in the “best interest of investors. The reaction came amid the backdrop of sharp market volatility in the aftermath of the Russia Ukraine battle. Tanushree Banerjee, Co-Head of Research Equitymaster said the weak market sentiment is disappointing for LIC IPO. In such a situation, there is a possibility of postponement of this IPO.
Liquidity in the domestic markets depleting
Atanu Aggarwal, Co-Founder, Upside AI, said that in the face of widespread uncertainty, there is always a sell-off in emerging markets. This means that the liquidity in the domestic markets is decreasing. TradeSmart President Vijay Singhania said that considering the current situation, it is not a big deal for the government to postpone the IPO for a few months. However, this will worsen the budget figures for the financial year 2021-22.