The listing of Life Insurance Corporation (LIC) and the sale of the government’s stake in IDBI Bank may be delayed beyond March 2021 because of depressed valuation amid the Covid-19 pandemic.
The government aims to garner Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank out of total divestment target of Rs 2.10 lakh crore during the current fiscal.
While presenting the budget for 2020-21, finance minister Nirmala Sitharaman had announced stake sale in LIC through an initial public offer in the current financial year.
Given the prevailing market situation, it seems to be difficult to do the LIC stake sale in the current fiscal as the situation is not conducive, sources said.
Besides, they said, there will not be a matching appetite for the mega issue of LIC in the present market condition.
Because of the pandemic, the government recently extended for the second time the deadline for bidding for the privatisation of India’s second-biggest oil marketing , Bharat Petroleum Corp Ltd (BPCL), by over a month to July 31.
At present, the government owns 100 per cent in LIC, while it holds around a 46.5 per cent stake in IDBI Bank.
The sources said the government will have to cut down its expected realisation from stake dilution of both LIC and IDBI Bank even if the market condition improves. So, selling them at low valuation would be an imprudent decision, they added.
Besides valuation, the sources said, listing of LIC involves a lot of regulatory clearances and more importantly amendment to the LIC Act itself.