On 25th January, the life insurance company LIC reported a profit after tax of INR 1,437 crore for the first half of the financial year 2021-22 as compared with INR 6.14 crore in the first half of last year. The company’s business premium growth rate in H1FY22 is 554.1% in comparison with 394.76% growth rate during the corresponding period of the previous financial year, LIC stated.
Government’s aim with the LIC IPO
The government’s goal is to sell close to 5% stake in LIC through this IPO. LIC’s profit from sales of investments, mostly equity assets, were already at 63% of the recorded profits amassed by the life insurer of INR 46,187 crore for the financial year ended March 2021.
LIC was also able to book profit worth INR 29,102 crore due to the sale of investments in the first six months of the last financial year.
IPO timing will be reevaluated
LIC’s IPO has been one of the fastest to get market regular SEBI’s approval; LIC had filed its DRHP on 12th February. Once a company’s DRHP gets final approval, the company can launch its share sale. However, The LIC IPO may go on into the next financial year. The government is most probably going to hold a meeting to reevaluate the IPO’s timing as the Russia-Ukraine war is escalating, according to sources.
Volatile market conditions
The foreign investors might be hesitant to invest in LIC public issue due to the volatile market conditions in the midst of the Russia-Ukraine conflict. Additionally, the government’s goal is to sell approximately 5% stake in the life insurance major via IPO.
Finance Minister’s statement on the issue
Finance minister Nirmala Sitharaman had “stated the government position” on the matter. She suggested that the global situation call for a reevaluation of the IPO timing. “Ideally, I’d like to go ahead with it because we had planned it for some time based purely on Indian considerations,” Sitharaman said, adding that “if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again”.
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