New Delhi: The Central government is pushing to get the initial public offering (IPO) of Life Insurance Corporation of India (LIC) done, Union Finance Minister Nirmala Sitharaman told Bloomberg in an interview. “We are pushing to have it done. The problem is not that we don’t want it or we are pussyfooting on it now, it is more a question of doing the due process,” FM Sitharaman said.Also Read - Ahead of IPO, LIC Sells Over 15 Lakh Policies, Leads in Individual Insurance. Details Here
FM Sitharaman has said a company of a size of LIC requires internal valuation “almost annually” but it “hasn’t been done”. “So the delay or the time that is being consumed is not due to the lack of political will to go ahead with the stated policy,” FM Sitharaman said, the Mint reported quoting Bloomberg. Also Read - LIC IPO: Government Sets 'Strict Timelines'; Details You Need to Know
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- Earlier in September, Chief Economic Adviser (CEA) K V Subramanian, who has decided to return to academia after completion of his three-year term in the finance ministry, exuded confidence that the LIC IPO’s listing would happen by the “fourth quarter of this year”.
- To facilitate the listing of LIC, the government earlier this year made amendments to the Life Insurance Corporation Act, 1956. As per the amendment, the central government will hold at least 75 per cent in LIC for the first five years post the IPO, and subsequently hold at least 51 per cent at all times after five years of the listing, according to a PTI report.
- The authorized share capital of LIC shall be Rs 25,000 crore divided into 2,500 crore shares of Rs 10 each, as per the amended legislation. Up to 10 per cent of the LIC IPO issue size would be reserved for policyholders, the PTI report says.
- The Cabinet Committee on Economic Affairs had in July cleared the initial public offering proposal of LIC.
- Notably, in her Budget 2021 speech, FM Sitharaman said the IPO of LIC would be launched in the financial year beginning April 1. Currently, the government owns 100 per cent stake in LIC, the PTI report says.
- Once listed, LIC is likely to become one of the biggest domestic companies by market capitalisation with an estimated valuation of Rs 8-10 lakh crore, as per the PTI report.
- The Department of Investment and Public Asset Management (DIPAM), which manages the government’s equity in state-owned companies, has selected actuarial firm Milliman Advisors for ascertaining the embedded value of LIC for meeting the government’s disinvestment target, PTI reported.
- Last month, DIPAM appointed 10 merchant bankers, including Goldman Sachs (India) Securities, Citigroup Global Markets India and Nomura Financial Advisory and Securities (India), to manage the mega initial public offering of the country’s largest insurer, as per PTI report.
- Other selected bankers include SBI Capital Markets, JM Financial, Axis Capital, BofA Securities, J P Morgan India, ICICI Securities and Kotak Mahindra Capital Co Ltd, PTI reported.