During the budget 2020 speech, the Finance Minister Nirmala Sitharaman on Saturday said that the Life Insurance Corporation (LIC) will be listed as part of the government disinvestment initiative and will sell a part of its stake in the entity through an initial public offering (IPO) and raise funds. Currently, the government owns a 100% stake in LIC, which was set up in 1956 and remains the country’s largest state-run insurer.
LIC to go on stock Exchange, says Nirmala Sitharaman
However, the finance minister did not provide any details regarding what percentage of holding would be sold or when it would take place. She said, “Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives (an) opportunity for retail investors to participate in the wealth so created.”
Meanwhile, speaking about IDBI Bank, the finance minister said, “In the last few years, the government has taken concrete steps to bring our banking system to be robust. However, there is a need for greater private capital. Accordingly, it is proposed to sell the balance holding of Government of India IDBI Bank to private, retail and institutional investors through the stock exchange.”
The Economic Survey 2020 has aggressively pitched for divestment in public sector undertakings (PSUs). The latest development comes close on the heels of the Union government’s announcement Monday to invite bids for 100% stake sale of national carrier Air India.
Metropolitan Stock Exchange, Interim CEO, Balu Nair said: “The LIC listing will be eagerly awaited by investors and will provide a huge fillip to capital raising through the primary market.”
Reportedly, LIC increased its share of the first-year premium income in the first nine months of this fiscal, rising to 70.52% from 66.24% recorded in 2018-19. According to Bloomberg estimates, its assets roughly equal $433 billion (over ₹30 lakh crore).
