Tag: Life Insurance Corp

While all eyes are on India’s biggest issue of the year, Finance Minister Nirmala Sitharaman said she’s yet to disclose the proportion being sold off in the IPO of Life Insurance Corp. (LIC). Sitharaman exclaimed, in an exchange with ET, that LIC did not have an ’embedded’ valuation mechanism.

ET asked her if she commits that the government stake would stay above 51% with general insurance companies to which she attested that she will have ‘government’s presence’ in that area and that it will obviously hold stake.

“We will have a fix obviously, but I will tell you only when I’m ready to tell you. The time which has been consumed for this is only to get the mechanisms put in place. You will know how unprepared public sector companies are for even facing their own realities. They (LIC) did not have an embedded valuation mechanism. Will you believe it!,” she replied on being inquired about there being a fix on how much stake the government will divest in LIC.

“Yes, it is an IPO,” validated Sitharaman on whether the government will maintain its stake at about 51% in case of the LIC IPO too.

‘Bare minimum’ presence of government will be there in all three segments of Insurance- life insurance, general insurance and reinsurance, the Finance Minister confirmed while adding that insurance is also a part of core and strategic sector listed items.

Companies that can’t either be merged or brought in for a bigger scale will be disposed of.

LIC IPO is important for the government to meet its yearly disinvestment target of Rs. 1.75 lakh crore. Government has plans to privatise two public sector banks and one insurance firm.

Rs 1.75 lakh crore is expected to come from selling of government stake in state-run banks and financial institutions. While Rs 75,000 crore is projected to flow in through CPSE disinvestment receipts.

The size of the share sale will be decided by a commission led by Finance Minister Nirmala Sitharaman. For the proposed IPO, the government has revised the LIC Act of 1956. The LIC has appointed Arijit Basu, the former MD of State Bank of India and former MD & CEO of SBI Life, as a consultant to help execute the IPO.