LIC Disinvestment Approved By Govt: Rs 1.75 Lakh Crore LIC IPO Gets Green Signal From Govt Panel

Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors.

The Union Cabinet has approved the disinvestment of LIC, India’s largest insurer.

A panel led by the finance minister will decide the quantum of stake to be diluted.


In Preparation Of IPO

The Department of Investment and Public Asset Management (DIPAM) in January appointed actuarial firm Milliman Advisors LLP India to evaluate LIC’s value ahead of its IPO.

The IPO is believed to be the biggest public issue in Indian corporate history.

The Budget amendments to the LIC Act have been notified and the actuarial firm will finalise LIC’s embedded value.

Under the embedded value method, the insurance company’s present value of future profit is also included in its present net asset value. 

Expected Timeline

The LIC IPO is expected to take place by the end of current fiscal wherein up to 10% of the IPO issue size would be reserved for policyholders.

The govt has already made the required legislative amendments in the LIC Act ahead of the IPO.

Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors.

The public listing is very important for the govt as it could help it meet its disinvestment target.

Govt Target Of Disinvestment And Privatisation

The govt aims to accumulate Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation. 

Of this amount, Rs 1 lakh crore is to come from selling the govt’s stakes in public sector banks and financial institutions.

The remaining Rs 75,000 crore would come as Central Public Sector Enterprises (CPSEs)  disinvestment receipts.

Future Entities To Be Privatised

As of now, the govt has secured Rs 3,994 crore from sale of Specified Undertaking of Unit Trust of India (SUUTI) stake in Axis Bank.

A further Rs 3,700 crore has come in from the share sale in National Mineral Development Corporation (NMDC).

Additional entities the govt will sell stake in by March 2022 include Bharat Petroleum Corporation (BPCL), Shipping Corporation, Container Corporation, Neelachal Ispat Nigam, Pawan Hans and Air India.

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