LIC IPO likely after Oct; BPCL, Air India disinvestment by Sept: govt official

The highly anticipated IPO of insurance behemoth Life Insurance Corporation of India (LIC) is expected after October this year, according to a top government official. Sharing details about the government's divestment calendar, the official said that the proposed stake sale in state-owned carrier Air India and oil firm BPCL would be completed within the first half of the financial year 2021-22.

In the Union Budget speech, Finance Minister Nirmala Sitharaman on Monday announced that the government would roll out the IPO for LIC in the next financial year. However, she did not specify a deadline for this. She also said strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans and Neelachal Ispat Nigam Ltd would be completed in 2021-22.

The government has introduced the legislative amendments required for disinvestment of a stake in LIC India and IDBI Bank through the Finance Bill, 2021 presented along with the Budget on Monday, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey told news agency PTI.

"LIC Amendment Act and Amendment to IDBI Bank (Transfer of Undertaking and Repeal) Act has been made part of the Finance Bill. There will be no separate bill. LIC IPO would come post-October," Pandey said.

Also Read: Budget 2021: LIC IPO in FY22 as government looks to resurrect poor disinvestment record

DIPAM, which manages government's equity in state-owned companies, has already selected actuarial firm Milliman Advisors for ascertaining the embedded value of LIC, ahead of the initial public offer. Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors, as per the report.

On IDBI Bank's strategic sale, Pandey said, "When the bank was formed in 2002 there was IDBI Repeal Act under which banking operations were provided and licence was also given. So the licence has to continue in case it is disinvested. For that to happen, in consultation with the RBI, we have worked out an amendment to the Act which is part of the Finance Act."  

Also Read: Budget 2021: LIC IPO to be rolled out in FY22

With regard to disinvestment in BPCL and Air India, Pandey said, "We are on course. The process is rolled on."  

There are three stages of the strategic disinvestment process - Expression of Interest (EoI), due diligence and Share Purchase Agreement (SPA), Request for Proposal (RFP) and then closing of the transaction.

"We are in the due diligence stage now. Within the first half (by September 2021) of next fiscal we expect the closure of BPCL, Air India and Shipping Corp transactions," the secretary added.

In the Union Budget 2021, the government has set a disinvestment target of Rs 1.75 lakh crore, much higher than Rs 32,000 crore estimated to be garnered in the current fiscal. Of the Rs 1.75 lakh crore, Rs 1 lakh crore to be garnered by selling government stake in public sector banks and financial institutions, while Rs 75,000 crore would come as CPSE disinvestment receipts.

With PTI inputs