India’s Mega Insurer IPO Poised to Slip Into Next Fiscal Year

(Bloomberg) -- The mega initial public offering of Life Insurance Corporation of India is set to be delayed into the next financial year amid market swings triggered by Russia’s invasion of Ukraine, people with knowledge of the matter said.

Bankers and officials are preparing to shift the listing of the state-run insurer to after the current fiscal year, which ends in March, the people said, asking not to be identified because the matter isn’t public. A formal announcement could be expected this week or next, they added, with one person saying the sale may happen as soon as April if market volatility eases. 

LIC’s underwriters have seen muted interest during early meetings with potential anchor investors, according to the people. Many fund managers have been wary of making major commitments amid the market volatility, the people said. 

A finance ministry spokesman didn’t immediately respond to a call on his mobile phone. LIC declined to comment.

LIC’s IPO will be the biggest to be impacted by the war, which has wiped out 6% of BP Plc’s market value and over $3 trillion of global market capitalization since tensions started rising from Feb. 18. Indian Prime Minister Narendra Modi had sought to raise as much as 654 billion rupees ($8.7 billion) from the deal, Bloomberg reported earlier, cash that is crucial to plug a gap in the budget deficit for the year through March 31.

India Finance Minister Nirmala Sitharaman said this week she “wouldn’t mind” taking another look at the timing of the LIC offering, though ideally she’d like to go ahead with it. Even if it doesn’t pursue the share sale on the original timeline, the government is still hoping to complete the IPO in the next few months, the people said. 

The deferment will be another setback for India, which has massively scaled down its asset sale target after the delay in privatization of other state-run companies, including Bharat Petroleum Corp Ltd. Modi’s administration had hoped to shrink the shortfall to 6.9% of gross domestic product, with the LIC IPO accounting for some 3% of revenue.

The government had also penciled in a record market borrowing for the financial year starting April 1.

India had offered to sell a 5% stake, or about 316 million shares in the insurer in what was seen as India’s Aramco moment. Just like the Gulf oil giant’s $29.4 billion listing, the world’s largest, LIC’s debut would test the depth of the nation’s capital markets and global appetite for the state-owned entity.

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