LIC IPO 2020: Govt Will Earn Rs 90,000 Crore By Selling 10% Stake; Who Will Control Rs 29 Lakh Cr Worth LIC Now?

During the Budget 2020 speech, FM Finance Minister Nirmala Sitharaman stunned the market and the Indian citizens by announcing the IPO of LIC, India’s biggest insurance provider having more than 70% market share.

While investors are excited over this mega IPO, which can be compared to the scale of Aramco IPO (Saudi’s biggest oil company), those who have insurance policies with LIC are worried.

Now, who will control LIC?

Govt Aims To Generate Rs 90,000 Cr Via LIC IPO

Now, some more news is coming in regarding the LIC IPO.

As per the reports, Govt. aims to sell 10% stake in LIC, which will enable them to earn Rs 90,000 crore.

LIC’s assets under management value has crossed Rs 30 lakh crore mark, and, its total market value is pegged at Rs 29 lakh crore as of March, 2019. 

In 2018-19, LIC’s total income was Rs Rs 560,784 crore, which includes both premium and investment income. This was an increase of 7.1%, compared to the previous fiscal.

Govt. aims to trigger a disinvestment of more than Rs 2 lakh crore in LIC and IDBI bank, and this can cause some unrest, especially among the 30 crore LIC policy holders.

While Govt. right now controls 100% in LIC, it controls 46.5% stake in IDBI Bank.

Who Will Control LIC Now?

As per statements issued by Minister Nirmala Sitharaman, it is clear that Govt will keep on controlling LIC, even after the IPO is launched.

This means that only Govt. will retain sovereign guarantee for LIC policy holders.

The Minister removed all apprehensions, when she said, “We have only said an IPO. We have not given complete ownership to somebody,”

As per Finance Secretary Rajiv Kumar, LIC’s IPO debut can happen in the second half of 2020, and right now, the Govt. is undergoing all the paperwork necessary to initiate such a mega IPO.

He said, “We will follow the extant procedure for listing and for other things including the legislative changes it requires in consultation with the Ministry of Law and that process we already started … listing in the second half of FY21 seems logical,”

It seems that in order to churn out an IPO of LIC, some major legislative changes will be required.

LIC is the biggest insurance provider in India, with 76.28% market share in number of policies and 71% market share in first-year premiums. 

We will keep you updated, as more details come in.