Woefully short of its disinvestment target for the current fiscal (2021-22), which is a humungous Rs 1.75 lakh crore, government is keen to push the countrys biggest ever public offering of Life Insurance Corporation of India (LIC), through which it is looking to raise anything between Rs 50,000 crore to Rs 90,000 crore, as per the initial public offer (IPO) size.
Let us have a look at what all has happened around this key development in the recent past.
As per various media reports, the state-run insurer is likely to file its draft papers for the IPO in the last week of this month and it may open for subscription in mid-March.
According to Bloomberg, the draft prospectus will provide the embedded value of LIC as well as the number of shares on offer.
The valuation of LIC is estimated to be around Rs 15 lakh crore, while the embedded value of insurer is likely to be more than Rs 4 lakh crore, the Bloomberg report said further.
The government is pinning its hopes of meeting its huge disinvestment target for the current fiscal from the LIC IPO, as till now it has managed to raise just Rs 9,240 crore.
The commerce and industry ministry is making changes in the foreign direct investment (FDI) policy to facilitate disinvestment of LIC, after taking views from the finance ministry, secretary in the department for promotion of industry and internal trade (DPIIT), Anurag Jain had said last week.
Mr Jain had further said that the current FDI policy related to the sector will not facilitate the disinvestment process of LIC and, hence, needs to be revised.
The matter is being discussed with the Department of Financial Services and Department of Investment and Public Asset Management (DIPAM), the senior official had informed.
“We have had two rounds of discussions at my level and now, we have (DPIIT, department of financial services and DIPAM) come on the same page. So, we are in the process of drafting those changes in the FDI policy. We will go to the Cabinet (for approval),” he was quoted as saying by PTI.
According to the current FDI policy, 74 per cent foreign investment is permitted under the automatic route in the insurance sector. However, these rules do not apply to the Life Insurance Corporation of India (LIC), which is administered through a separate LIC Act.
As per SEBI rules, both FPI and FDI are permitted under public offer. However, sources said that since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation, PTI reported.