LIC IPO subscribed 1.02 times, policyholders’ quota over 3 times
The initial public offering of insurance major Life Insurance Corporation of India has been subscribed 1.02 times on the second day of the issue.
Left parties today raised an alarm over the Life Insurance Corporation (LIC) IPO when it is about to hit the stock market in a few days.
The CPI (M) said this was “a step towards destruction of the public character of the LIC and handing over priceless financial assets, largely owned by nearly 29 crore policyholders of the LIC.”
The LIC has a unique place in the world of insurance, the party said. A hybrid saving-cum-risk coverage product was innovated and proved to be popular with ordinary people.
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Where the Government of India invested only Rs 5 crore, the total life fund today is Rs 34 lakh crore.
Now the government wants to change the character of the financial institution from a trust of policy holders to a profit-maximizing company owned by shareholders, the party said.
About two months ago, it was expected that the real worth of each LIC share would be arrived at by applying a multiplication factor of between 2.5 and 3.
Cajoled by international investors, the government is trying to scale down the LIC valuation dramatically by using a multiplication of just 1.1 times LIC’s estimated Embedded Value (EV), the CPI (M) said.
Despite a quarter-century of deregulation of the insurance sector, LIC still accounts for 73 per cent of the policies and 61 per cent of the first-year premium in the country.
A company that has pioneered life insurance in India, and whose track record is without a blemish over six decades, is allowed to be “valued” by capricious international investors out to make a fast buck at the cost of millions of policyholders, the CPI (M) alleged.
Communist Party of India General Secretary D Raja said that it is a matter of great regret that the BJP-led NDA government is hell-bent on “selling off” all national assets.
Raja said 22 crore of LIC’s shares are being given to private hands which will fetch about Rs 20,000 crore of revenue to the Central government.
“The move is totally a retrograde one, which is against the national interests and against the interest of LIC’s policy holders,” the CPI leader said.
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