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The Ukraine-Russia war hits India’s largest-ever IPO plan

Man looks out of the window of a house above the Life Insurance Corporation of India (LIC) office in Mumbai
REUTERS/Francis Mascarenhas
A man looks out of the window of a house above the Life Insurance Corporation of India (LIC) office in Mumbai, India January 28, 2022.
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India’s ambitious plan to list its state-run behemoth Life Insurance Corporation (LIC) on the bourses has met with another hurdle—this time, the Russian invasion of Ukraine.

On March 1, finance minister Nirmala Sitharaman said India may take another look at the timing of LIC’s initial share sale, amid war clouds. This follows multiple calls from analysts to delay the offer as it may not attract global investors.

In February, overseas investors pulled out 38,068 crore rupees ($5.03 billion) from Indian equities and debt, which was the highest monthly outflow of foreign funds since March 2020.

“Ideally, I’d like to go ahead with it…But now, if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again,” Sitharaman said in an interview with BusinessLine newspaper.

The issue was earlier slated to run from March 10 to 14.

India’s history of missing divestment target

The review of LIC’s mega IPO could impact its timing. The government’s share sale in the life insurer made up for the biggest slice of the country’s $10.4-billion asset-sale programme for this financial year.

The government had set a March deadline and was, until last week, ready to go ahead with the plan, indicating an urgency to mop up funds. If the offer goes through, it would boost prime minister Narendra Modi’s reputation as a market-oriented reformer amid key state elections, and help plug a gaping budget deficit.

“If the listing happens, it could change the global image of India,” James Beeland Rogers, chairman of Singapore-based Beeland Interests, had told Bloomberg earlier.

When asked if the decision to delay the IPO could be constrained by the fact that the government sets annual disinvestment targets, Sitharaman said she would “have to explain it to the whole world,” while a private sector promoter would only explain to the company’s Board.

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