The government has set a target of raising Rs 1.75 lakh crore from disinvestment in the current financial year. In this, one lakh crore rupees will be raised from the government’s stake sale in public sector banks and financial institutions.
The Union Cabinet has approved the disinvestment of the country’s largest insurance company Life Insurance Corporation (LIC). A senior official gave this information on Monday. According to the official, a committee headed by the Finance Minister will decide the quantum of stake sale in LIC. It is being called the biggest IPO in Indian corporate history. Budget amendments to the LIC Act have been notified.
IPO will come in this financial year
An official told news agency PTI, “The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal for IPO of LIC last week. The quantum of stake sale will be decided by the government by alternative arrangement on disinvestment. Up to 10 percent of the issue size of LIC IPO will be reserved for policyholders. The government has already made necessary legislative amendments in the LIC Act for the proposed IPO.
Target to raise Rs 1.75 lakh crore
Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors. The listing of LIC is important in view of the government’s disinvestment target for the current financial year. The government has set a target of raising Rs 1.75 lakh crore from disinvestment in the current financial year. Of this Rs 1.75 lakh crore, Rs 1 lakh crore will be raised from the government’s stake sale in public sector banks and financial institutions. The remaining Rs 75,000 crore will come from disinvestment of Central Public Sector Undertakings.
According to the latest annual report released by LIC, at the end of the financial year 2019-20, the total assets of LIC are considered to be Rs 32 lakh crore. Its market share in the domestic insurance sector is close to 70 percent. The government currently holds 100 per cent stake in the company.
LIC’s stake in IDBI Bank will also be sold
Let us tell you that LIC’s stake will be sold along with the government’s stake in IDBI Bank. Both the central government and LIC together hold 94 percent stake in IDBI Bank. LIC currently has management control of the bank. Its stake in the bank is 49.24 percent. At the same time, the government has 45.48 percent stake in the bank. The share of non-promoters is 5.29 per cent.
Insurance company LIC had acquired a controlling stake in IDBI Bank in January 2019. DIPAM, which manages the government’s equity, has clarified to merchant bankers that along with the government’s stake in IDBI Bank, LIC’s stake will also be sold. However, how much it will be, it will be decided later.
