New Delhi: Coronavirus outbreak has put the government's ambitious LIC (Life Insurance Corporation) IPO plan in peril, a source aware of the matter has told PSU Watch on the condition of anonymity. The news comes exactly a month after the government ended the previous financial year (FY2019-20) with a disinvestment yield of Rs 50,298.64 crore, which was short of the target of Rs 65,000 crore by around Rs 15,000 crore.
The source said, "The LIC IPO will be huge. And the market is in poor condition right now. There are several issues that we will have to consider before launching it. Will there be enough appetite? We don't know. There is too much uncertainty right now."
"As far as the government is concerned, there is no change in its disinvestment plans for FY2020-21. There are two components of the plan. One is strategic disinvestment and OFS which is expected to fetch Rs 1.11 lakh crore. And the other is the LIC IPO which is expected to yield Rs 90,000 crore. If at all changes will be made to the plan or not will depend on the future course of events. It will depend on bidders and on market conditions. So, for now, we can only wait and watch," the source added.
For FY2020-21, the government has set a disinvestment target of Rs 2.1 lakh crore. The LIC IPO is expected to contribute a big chunk towards the total tally. It is the second-largest issue after Coal India in 2010. However, with the market continuing to be in a volatile situation, the IPO plan certainly faces a lot of uncertainty. Before announcing the issue, the government will have to amend the LIC Act and convert LIC to a company under the Companies Act.