Union Finance Minister Nirmala Sitharaman on Friday reviewed progress of Life Insurance Corporation of India (LIC) IPO in New Delhi in presence of DIPAM secretary, LIC officers and other senior officials via video conferencing.
The meeting holds significance as the government is planning to come up with the initial public offering (IPO) of LIC in the current financial year ending March 2022. The update on the same is anticipated in the upcoming Budget for the fiscal year 2022-2023, slated to take place in first week of February.
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.
Meanwhile, the finance minister also chaired a review meeting with the heads of Public Sector Banks (PSBs). During the review meeting held in New Delhi, the bankers told Sitharaman that they were confident that PSBs are adequately capitalised and banks are prepared for any stress scenarios in future.
The government in September last year appointed 10 merchant bankers, including Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd to manage the mega IPO of the country's largest insurer LIC.
Other selected bankers include SBI Capital Market Ltd, JM Financial Ltd, Axis Capital Ltd, BofA Securities, J.P. Morgan India Pvt Ltd, ICICI Securities Ltd, and Kotak Mahindra Capital Co Ltd.
Cyril Amarchand Mangaldas has been appointed as legal advisor for the IPO.
The Cabinet Committee on Economic Affairs (CCEA) had in lastJuly given its in-principle approval for the listing of LIC. The government has already appointed 10 merchant bankers for the transaction.
To facilitate the listing of LIC, the government had made about 27 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.
The authorised 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.
In her Budget Speech 2021, Sitharaman had said that 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 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.