LIC IPO: This week the IPO of Life Insurance Corporation of India can get approval from the cabinet. For the current financial year, the central government has set a disinvestment target of Rs 1,75,000 crore. LIC IPO is being considered very important to fulfill this goal.
Efforts to sell stake in state-run insurance company LIC have intensified. The news agency Bloomberg has said in a report that this week LIC IPO can get approval from the cabinet. The government wants to bring an IPO to sell some stake in Life Insurance Corporation of India by January 2022. However, a number of formalities have to be completed before the IPO.
The news of the last days had come that the central government may invite bids from merchant bankers this month for the disinvestment management of LIC. In January this year, the DIPAM department of the finance ministry had assigned actuarial firm Milliman Advisors LLP India the responsibility of assessing the embedded value of LIC ahead of the IPO. It is believed that this can prove to be the biggest IPO ever in India.
It will be the responsibility of this firm to calculate the LIC Embedded Value in the next few weeks. In embeddable value method, the net asset value (NAV) of an insurance company is added to the present value of future profits.
What will be the impact on policyholders?
It is being said that about 10 percent of the LIC IPO will be kept reserved for the policyholders. Minister of State for Finance Anurag Singh Thakur had given information about this in February this year. Even after the IPO, the maximum stake in LIC will be with the central government.
However, some legal amendments are also going to be required before bringing LIC IPO. Deloitte and SBI Capital have been appointed as transaction advisors ahead of the IPO of the country’s largest insurance company.
Target to raise Rs 1,75,000 crore through disinvestment
It is worth noting that the listing of LIC is very important for the central government to meet the target of disinvestment. The central government has set a target of raising Rs 1,75,000 through stake sale and privatization during the current financial year. Out of this Rs 1.75 lakh crore, about Rs 1 lakh crore is to be raised from the sale of public sector banks and financial institutions. Whereas, Rs 75,000 crore is to be raised through disinvestment of CPSEs.
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