LIC’S IPO could come in second half of next fiscal
SHARE SALE Insurer’s listing will bring in greater transparency, says finance secy
NEW DELHI: Listing of insurance behemoth Life Insurance Corporation (LIC) may be done in the second half of the next financial year, finance secretary Rajiv Kumar said on Sunday.
The Union finance minister Nirmala Sitharaman while presenting the Budget 2020-21 on Saturday announced stake sale in LIC through an initial public offer (IPO) in the next fiscal.
There are a number of processes which have to be followed for the listing and some legislative changes would also be required for the listing of LIC, Kumar 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 s eems l ogical,” he said.
Listing of LIC will bring in greater transparency, public participation and also deepen the equity market, he told PTI in an interaction.
Asked about the quantum of dilution, Kumar said, it could be 10% but no decision has been taken so far.
The government aims to garner ₹90,000 crore from the listing of LIC and stake dilution in IDBI Bank in the next fiscal out of the total disinvestment target of ₹2.10 lakh crore.
The government currently owns 100% in LIC, while it holds around a 46.5% stake in IDBI Bank.
“Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of initial public offer,” the finance minister had said in her budget speech.
Market participants are quite bullish about LIC and said it could be “IPO of the decade” akin to the Saudi Aramco listing.
The 60-year-old state-owned f i rm, LIC, i s t he country’s largest insurer, controlling more than 70% of the market share. The insurer has a market share of 76.28% in number of policies and 71% in first-year premiums.
LIC has many subsidiaries including IDBI Bank. It acquired controlling stake in IDBI Bank last year.
DEBT-BASED ETF Meanwhile, Sitharaman on Sunday said second tranche of debtbased exchange-traded fund (ETF) is likely in the current quarter.
Sitharaman in the budget on Saturday proposed to deepen the bond market and announced floating of a new debt ETF comprising primarily of government securities.
The first bond ETF launched recently was a great success.
“Debt-based exchange traded fund recently put out by the government was a big success. Government proposes to extend this by floating a new debt ETF consisting primarily of government securities. This will give retail investor access to government security as much as giving an attractive investment for pension funds and long-term investors,” she had said on Saturday.
On Sunday, she said the second tranche of Bharat Bond ETF is likely within the current quarter.
The Cabinet gave the approval to launch Bharat Bond Exchange Traded Fund or Bharat Bond ETF in December 2019. It was the first corporate bond ETF launched in India.