The department of investment and public asset management (DIPAM) has appointed merchant bankers and legal advisers for minority stake sales by the government in state-run Life Insurance Corporation (LIC) and other financial institutions, DIPAM secretary Arunish Chawla said on Friday.
The merchant bankers and legal advisers have been appointed for three years to undertake minority stakes sales at opportune times in LIC, public sector banks and insurance companies.
Centre is likely to sell small stakes in LIC and PSBs
The move assumes importance as the Centre will likely sell small stakes in LIC and up to five PSBs to help them meet the minimum public shareholding (MPS) norms of the Securities and Exchange Board of India (Sebi).
In May 2024, the Sebi gave three more years or till May 16, 2027 to LIC to achieve a minimum public shareholding of 10%. The Sebi norm mandated that listed firms have a minimum 10% public holding within two years of listing. The public float in LIC is just 3.5% after the government sold the stake in May 2022 to raise Rs 20,516 crore.
Govt plan for attracting a long-term investor pool for LIC
Despite LIC being a large-cap company with a market capitalization of close to Rs 5.6 lakh crore, it is not part of the benchmark indexes –S&P BSE Sensex or Nifty 50. So, the government could initially sell at least another 1.5% stake in LIC to make the stock eligible to be part of index funds to attract a larger long-term investor pool.
Separately, Chawla said a capital management review of central public sector enterprises (CPSEs) is being undertaken weekly to ensure that they meet their capex target and continue to energise the economy.
Public sector undertakings now account for 15% of the market cap of listed companies.