Lagatar24 Desk
New Delhi, Dec.20: The government is unlikely to launch the much-anticipated initial public offering (IPO) of Life Insurance Corporation (LIC) in the current financial year, which ends in March 2022, because the state-owned behemoth’s valuation is taking longer than expected, and preparatory work is yet incomplete.
Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM), however, maintained that the LIC IPO is on track.
According to a senior employee of one of the merchant bankers, there are still certain concerns to be resolved in terms of LIC valuation. Several regulatory processes have ended even after the appraisal.
The IPO will be vetted not only by the Securities and Exchange Board of India (SEBI), but also by the Insurance Regulatory and Development Authority of India (IRDAI), which has been without a head for over seven months, according to the official.
DIPAM Secretary Tuhin Kanta Pandey expressed confidence that LIC’s IPO plans are on track and will take place in the January-March quarter of 2021-22.
Because of its size, product mix, real estate assets, subsidiaries, and profit-sharing structure, LIC valuation is a complicated procedure, according to another official, and the size of the share sale is determined by the valuation.
Given the quantity of regulatory procedures to be completed, the official stated that meeting the fourth quarter of the current financial year’s deadline would be challenging by any stretch of the imagination.
The government is counting on the LIC IPO and the strategic sale of Bharat Petroleum Corporation Limited (BPCL) to reach its Rs.1.75 lakh crore disinvestment aim.
Finance Minister Nirmala Sitharaman recently stated that the administration is making good headway on disinvestment.
“The tying up of loose ends among bureaucracy and different departments consumes its own time and that is what we are trying to speed up,” she had said.
In July, the Cabinet Committee for Economic Affairs (CCEA) gave its in-principle permission for LIC’s listing. For the transaction, the government has already hired ten merchant bankers. The government amended the Life Insurance Corporation Act, 1956, earlier this year to make it easier for LIC to be listed.
According to the amendment, the federal government will own at least 75% of LIC for the first five years after the IPO, and at least 51% at all times after that. LIC’s authorised share capital will be 25,000 crore, divided into 2,500 crore shares of 10 each. Policyholders would be entitled to up to 10% of the LIC IPO issue size.
