Govt Wants More Foreign Investors For LIC IPO; Rules To Be Changed, Marketing Blitz Planned

We have previously shared that the listing of the LIC IPO could take place by March 2022 and it will be India’s biggest-ever IPO.

And now, capital markets-rules are being adjusted, phone messages are being sent, in order to ensure that Life Insurance Corp. of India’s record initial public offering is a huge hit!

Read on to find out all the details!

Government Changes Market Rules To Attract Foreign Investors

As per reports, the Government will hold at least 75% in LIC for the first 5 years after the IPO, which will reduce to 51% thereafter.

Once listed, LIC will likely become one of the biggest domestic companies by market capitalisation with an estimated valuation of Rs 8-10 lakh crore.

As per Abhay Agarwal, fund manager at Mumbai-based Piper Serica Advisors Pvt., “The size of LIC is breathtaking. It will require significant marketing efforts to cross the 500 billion rupees line.”

As per reports from officials, authorities have been appointed to look over and change any rules on foreign direct investment so that it will be easier to attract foreign investors. However, a time frame hasn’t been specified. 

Usually, equity stakes among foreigners are permitted for most Indian insurers, with the exception of LIC, as LIC is a special entity created by an act of Parliament. 

SMSes Sent, Newspaper Ads Published

SMSes are being sent by LIC to policyholders, newspaper advertisements are also being published with titles like “It’s best in life to be prepared.” LIC has also asked customers to update their personal details and the accounts that allow them to take part in the issue. 

Additionally, the Securities and Exchange Board of India will be recruiting 120 senior executives across its legal, information technology, research, and general and official language departments, representing about 14% of its employees.  

The listing will be crucial for the government to achieve its disinvestment target of Rs 1.75 lakh crore for 2021-22 (April-March). So far this fiscal, it has received Rs 9,110 crore through minority stake sales in PSU and sale of SUUTI stake in Axis Bank.

It would use the money raised to address India’s budget deficit, which is forecast to be 6.8% this year. It will also sell majority stakes in four other state-run firms — Air India, Bharat Petroleum Corp., Shipping Corp. of India and Container Corp. of India.