Centre is going to set up an inter-ministerial panel that will work on various aspects of Initial Public Offering (IPO) for Life Insurance Corporation (LIC) while stake dilution is unlikely to be more than 10%, reports said on Monday.
The panel will comprise members from the Department of Financial Services along with the Department of Investment and Public Asset Management (DIPAM).
The IPO for the LIC is likely to be launched in the second half of FY21, Finance Secretary Rajiv Kumar said on February 2.
The decision to sell a part of the government’s stake in the LIC for IPO was one of the major announcements of the Union Budget 2020-21, presented by the Finance Minister Nirmala Sitharaman on February 01.
Kumar further said there are a number of procedures that have to be followed for the listing. This will include some legislative changes also.
“We will follow the extant procedure for listing and for other things including the legislative changes it requires in consultation with the Ministry of Law and that process we already started … listing in the second half of FY21 seems logical,” he said.
The government currently owns 100% in LIC, while it holds around a 46.5 per cent stake in IDBI Bank.
The government aims to garner ₹90,000 crore from the listing of LIC and stake dilution in IDBI Bank in the next fiscal out of total disinvestment target of ₹2.10 lakh crore.
“Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO),” the Finance Minister had said in her Budget speech.
Market participants are quite bullish about LIC and said it could be “IPO of the decade” akin to the Saudi Aramco listing.
The 60-year-old state-owned firm, LIC, is the country’s largest insurer, controlling more than 70% of the market share. The insurer has a market share of 76.28% in number of policies and 71% in first-year premiums.
LIC has many subsidiaries including IDBI Bank. It acquired a controlling stake in IDBI Bank in 2019.
(With input from agencies)