Listing of Life Insurance Corporation (LIC) and sale of government's stake in IDBI Bank may be delayed due to weak market situation amid ongoing coronavirus crisis. The government may currently find it challenging to sell stake due to muted market valuation and the same may be delayed beyond March 2021, news agency PTI reported citing unidentified sources.
In the budget 2020-21, Finance Minister Nirmala Sitharaman had announced that the government is looking to sell stake in the public sector insurer via an initial public offering (IPO) during FY21. The government currently owns 100 per cent in LIC, while it holds nearly 46.5 per cent stake in IDBI Bank. The government is estimated to raise Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank out of total the disinvestment target of Rs 2.10 lakh crore during the ongoing fiscal.
Amid the ongoing coronavirus crisis, the government recently, for the second time, extended the deadline for bidding for the privatisation of Bharat Petroleum Corp Ltd (BPCL) by over a month to July 31. The report also said that the government will have to cut down its expected realisation from stake dilution of both LIC and IDBI Bank even if the market condition sees an improvement.
Besides valuation, the report said, the listing of LIC involves a lot of regulatory clearances and more importantly amendment to the LIC Act itself. Market participants had already termed the listing of insurance behemoth LIC as IPO of the decade akin to the Saudi Aramco listing. LIC is the country's largest insurer, controlling more than 70 per cent of the market share. The insurer has a market share of 76.28 per cent in a number of policies and 71 per cent in first-year premiums. LIC has many subsidiaries, including IDBI Bank.