The government is likely to sell up to 25 per cent stake in Life Insurance Corporation of India (LIC) in one or more tranches. The retail investors are also expected to get bonus and IPO-discount.
"The Department of Financial Services under the finance ministry has floated a draft Cabinet note for stake sale in LIC to the ministries concerned, SEBI, IRDA and NITI," Moneycontrol reported citing an unidentified source. "Dilution of government shareholding from 100 percent to 75 percent in LIC in one or more tranches has been proposed," the report also said.
The IPO of LIC is expected to contribute a huge chunk to the government's budgeted disinvestment kitty of Rs 2.10 lakh crore this fiscal. In the 2020-21 budget, Finance Minister Nirmala Sitharaman had announced the government's plan to sell a part of its stake in LIC by way of IPO.
"Listing of companies on stock exchanges disciplines the company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created," she had said. The government is looking at listing the insurer on domestic bourses in the January-March quarter of the current fiscal.
Meanwhile, the government is expected to hire Deloitte Touche Tohmatsu India and SBI Capital Markets for the LIC's IPO. According to a report by Bloomberg, the advisers will help evaluate the capital structure of Life Insurance Corporation (LIC) and will also help the country's biggest insurer in reworking its financial statement. The government will soon invite bid seeking firms to value LIC.