LIC’s employees union pressures against the government’s IPO plan
The Life Insurance Corporation’s employees union has decided to step up pressure against the government’s Initial Public Offering (IPO) Plan, a day after the finance minister indicated the centre has an open mind on the timing of the IPO launch because of the escalation in the Ukraine crisis.
After sounding upbeat last week on LIC’s prospects despite the deteriorating market condition, finance minister Nirmala Sitharaman told the media on Tuesday the government was open to reviewing the IPO plans due to prevailing market conditions.
“I wouldn’t mind looking at it again,” Ms Sitharaman said in an interview with Business Line newspaper, referring to the timing of the LIC offering. “Now, there is a full-scale war. Therefore, I need to go back and review the situation.”
Meanwhile, the All India Insurance Employees Association has decided today that LIC employees will hold sit-in protests on March 5, 2022, across all divisional headquarters of LIC in the county against the government’s decision to bring an IPO.
That comes a day after an exclusive report by Reuters, which showed bankers advising LIC on its IPO had pushed the government to defer the launch of the stock offering in the wake of the market jolt caused by Russia’s invasion of Ukraine according to two sources familiar with the talks.
In India’s most prominent stock offering, the government has plans to raise about $8 billion by selling 5 per cent of LIC’s stake this month before the fiscal year ends on March 31. The offering is also critical as it will help New Delhi raise funds for budgeted spending.
A selloff in global markets following Russia’s invasion of Ukraine and subsequent Western sanctions has made companies cautious about IPOs, with some putting their plans on hold. Chinese fashion retailer Shein, GCP Co-Living REIT in London and German artificial limb maker Ottobock have put their IPO plans on hold.
If the LIC IPO is delayed, it will add to the growing list of planned offerings being put on hold as the war dampens investor appetite for risky assets.
But two bankers familiar with discussions said the investment banks on the deal were piling pressure on the government and raised concerns in a recent closed-door meeting to delay the IPO by saying market conditions were no more conducive due to volatility caused by Russia-Ukraine tensions, according to the Reuters report.
The bankers have told the Indian government that launching LIC’s stock offering would make sense in the coming months when investors are more confident, told one of the bankers directly involved in the negotiations to Reuters.
“We have communicated our concerns… it is likely that a decision on (revised) IPO timing can come by this week,” the banker told Reuters.
Foreign investors have been busy re-working their portfolios given the market turmoil and have had no time to evaluate the LIC prospectus; the second banking source told Reuters.
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