Hope volatility in markets recedes for LIC IPO launch: DIPAM secretary

There are certain external factors affecting the markets because of the conflict in Europe, and the government is watching the situation carefully, the official said

The government hopes to launch the initial public offering (IPO) of the Life Insurance Corporation of India (LIC) as soon as stock market volatility, sparked by the Russian invasion of Ukraine, recedes, said Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey.

The draft red herring prospectus (DRHP) of LIC has received “prima-facie” clearance from the Securities and Exchange Board of India (Sebi), subject to fulfilment of certain requirements, Pandey said at an industry interaction.

“We may be good to go and we are watching the market situation and hopefully we should be able to bring out the IPO soon,” Pandey said at the interaction, organised by the Merchants’ Chamber of Commerce & Industry.

There are certain external factors affecting the markets because of the conflict in Europe, and the government is watching the situation carefully, Pandey said.

“We hope that things will recover, oil prices will probably cool off, and our hope is that the volatility in the market will also come down as the markets engage with the new realities,” he said.

“Tremendous” strengthening of capital markets has taken place ahead of the largest Indian IPO, Pandey said. India now has 84 million demat accounts, with about 10 million demat accounts having been opened only for the LIC IPO. The capital market infrastructure has been upgraded to process higher transactions, facilitate easy bank clearing processes for large volume UPI transactions, Pandey said.

Asset monetisation

The government is set to exceed its asset monetisation target of Rs 88,000 crore for the current financial year, Pandey said. A large chunk of the receipts, over Rs 50,000 crore, will come from mining sector, where a lot of work has been done in mine developer and operator (MDO) model, he added. In the roads sector, about Rs 17,000 crore of asset monetisation has already taken place, and PowerGrid Corporation of India has realised Rs 7,500 crore, Pandey said.

To ensure the success of the asset monetisation drive, the government is mindful of issues regarding dispute settlement and risk allocation as the success of asset monetisation will depend on the quality of drafting of concession agreements, Pandey said.

These agreements should ensure fair risk allocation, he said. “If we allocate excessive risk to the private player, then they might fail as what had happened in the first round of public-private partnerships (PPP),” he said.

Privatisation

The process of privatisation has been well tested with the sale of Air India and Nilachal Ispat Nigam (NINL), Pandey said. The Centre has also signed the share purchase agreement with buyers of NINL, Tata Steel Long Products on Thursday, he said.

Several transactions such as Bharat Petroleum Corporation (BPCL), BEML, Shipping Corporation of India, Pawan Hans, Projects & Development India, units of SAIL, are at an advanced stage, Pandey added.

The Centre will soon invite expressions of interest (EoIs) for the privatisation of IDBI Bank, Vizag Steel Plant, CONCOR, NMDC Steel and Ferro Scrap Nigam, he said.