The government will list the country’s largest insurer LIC on the stock exchanges by March-end, a top official said on Thursday. The draft papers for LIC’s initial public offering (IPO) is being finalised and will be filed with market regulator Sebi soon for its approval. “LIC disinvestment amount will be included in this year’s (Budget) because we aim to list it before March 31,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey told PTI. LIC IPO is crucial for meeting the disinvestment target set for the current fiscal ending March 2022.
The Budget for 2021-22 has set a disinvestment target of Rs 1.75 lakh crore, as against Rs 32,835 crore garnered in the last fiscal. Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and Rs 75,000 crore will be CPSE disinvestment receipts. So far this fiscal, Rs 9,330 crore has been mopped up through minority stake sale in PSUs. Life Insurance Corporation of India (LIC) earlier this week reported a profit after tax of Rs 1,437 crore for the first half (April-September) of the current financial year, compared to Rs 6.14 crore in the year-ago period.
Its new business premium growth rate stood at 554.1 per cent in H1 FY22, as against 394.76 per cent earlier. The government in September last year appointed 10 merchant bankers, including Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd, to manage the mega initial public offering of the insurance behemoth. Other selected bankers include SBI Capital Market Ltd, JM Financial Ltd, Axis Capital Ltd, BofA Securities, J.P. Morgan India Pvt Ltd, ICICI Securities Ltd, and Kotak Mahindra Capital Co Ltd.
Cyril Amarchand Mangaldas has been appointed as legal advisor for the IPO.
The government is in the process of deciding the quantum of its stake that will be divested through the IPO. It is also mulling allowing foreign investors to pick up stake in LIC. As per Sebi rules, foreign portfolio investors (FPI) are permitted to buy shares in a public offer. However, since the LIC Act has no provision for foreign investments, there is a need to align the LIC IPO with Sebi norms regarding foreign investor participation.