Cabinet clears LIC IPO; listing by March 2022

The Cabinet Committee on Economic Affairs has likely cleared the plan for initial public offering (IPO) of state-owned insurer Life Insurance Corporation (LIC).
 
The government plans to list the shares of the company on stock exchanges by March 2022, CNBC-TV18 reported citing sources.
 
A ministerial panel will decide on the price and the quantum of government stake which will be divested in the IPO, it said.
 
The government had said it would sell a part of its stake in LIC through IPO in 2020-21, but the outbreak of COVID-19 pandemic thwarted its plans. While presenting the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman said the government would come out with IPO of the insurer in FY22.
 
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The government has already begun the preparations for IPO, and has mandated Milliman Advisors to compute the embedded value of LIC. It has also done away with the post of chairman of the insurer. LIC will now have a post of chief executive officer and managing director.
 
To facilitate the IPO, the government has also given its nod to raising the insurance behemoth's authorised share capital to Rs 25,000 crore. Besides, the Department of Economic Affairs, under the Finance Ministry, recently also amended the Securities Contracts (Regulation) Rules.
 
Companies that have a market capitalisation of more than Rs 1 lakh crore at the time of listing can now sell just 5 per cent of their shares with the latest amendment in rules, a move that will be beneficial for the government during the LIC initial public offer.
 
Such entities will be required to increase their public shareholding to 10 per cent in two years and raise the same to at least 25 per cent within five years.

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