LIC IPO may come in 2nd half of FY21, says Finance Secretary
The Finance Secretary says listing of LIC will bring in greater transparency, public participation and also deepen the equity market.
Finance Minister Nirmala Sitharaman while presenting the Budget 2020-21 on Saturday announced about the stake sale in LIC through an initial public offer in the next fiscal. The Finance Secretary, Rajiv Kumar says that the listing of insurance behemoth Life Insurance Corporation (LIC) might be done in the seond half of the next financial year.
There are a number of processes which have to be followed for the listing and some legislative changes would also be required for the listing of LIC, Kumar said.
"We will follow the extant procedure for listing and for other things including the legislative changes it requires in consultation with the Ministry of Law and that process we already started ... listing in the second half of FY21 seems logical," he said.
Listing of LIC will bring in greater transparency, public participation and also deepen the equity market, he told PTI in an interaction.
Meanwhile, LIC employees' unions on Saturday opposed the Centre's plan to sell a part of its shares in the state-run insurance behemoth through an initial public offer (IPO), insisting that the move is "against the national interest".
"We strongly oppose the government's plan to sell a part of its shares in LIC and the move is against the national interest," a spokesman of an employees' union told reporters.
Asked about the quantum of dilution, Kumar said, it could be 10 per cent but no decision has been taken so far.
The government aims to garner Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank in the next fiscal out of total disinvestment target of Rs 2.10 lakh crore.
The government currently owns 100 per cent in LIC, while it holds around a 46.5 per cent stake in IDBI Bank.
"Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO)," the Finance Minister had said in her Budget speech.
Market participants are quite bullish about LIC and said it could be "IPO of the decade" akin to the Saudi Aramco listing.
The 60-year-old state-owned firm, 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 number of policies and 71 per cent in first-year premiums.
LIC has many subsidiaries including IDBI Bank. It acquired controlling stake in IDBI Bank last year.