Conflict of Russia-Ukraine Shall Not Interfere with LIC’s Mega IPO Plan

LIC’s initial public offering (IPO) should go forward as planned, in spite of the enhanced uncertainty and volatility predicted in financial markets even as the war continues.

Despite increased uncertainty within the near-term and more volatility anticipated in financial markets even as the war continues, Life Insurance Corporation’s Initial Public Offering should go through as planned and should not be influenced by the continuing Russia-Ukraine conflict.

The public sale of shares by India’s state-operated LIC, which you can expect to be the nation’s biggest, would be a test of the profundity of domestic capital markets, particularly as financial markets grapple with geopolitical uncertainty and the consequences of the war within Ukraine remain unclear.

Following the significant escalation throughout tensions within Europe, financial markets are now on a roller coaster ride for the past week. Post-Russian President Vladimir Putin ordered its nuclear forces placement on the highest alert as well as Western countries responded with sanctions imposed, safe-haven bets rose.

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Due to increased volatility, further pain is forecast for international risk assets in the week. However, the IPO of LIC is unlikely to be hampered by volatility or risk avoidance.

“On Thursday, the market bled tremendously, and on Friday, it went up over 2%. Looking at this market situation, there is no need to worry about the behemoth’s listing. Finance Minister Nirmala Sitharaman on Tuesday said that there is interest in the LIC IPO, and it will be launched as decided,” said Mr. Agarwal.

“The market is volatile for many reasons, but the central government needs to meet the fiscal target. Moreover, the IPO was long due; the IPO being pushed to a later date is very unlikely,” he added.

The government is racing to finish the IPO by the end of March to fulfil its fiscal deficit target for 2021-22, which is required to fund the budget’s fiscal expansion objectives.

The government anticipates this step, among other FDI policy changes, to “make India an attractive investment destination” and therefore is proceeding with the list of LIC’s shares that is expected to be available for subscription within 2nd week of March.

The public announcement of LIC’s shares is slated to begin on March 11 among anchor investors. A few days later, this book would be offered for bidding by other investors.

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