LIC listing may take about a year: Kumar

Enterprise value of LIC is said to be about ~36 trn

The listing of Life Insurance Corporation (LIC) will likely take about one year and the government is not willing to sell more than 10 per cent stake in the insurance behemoth.

“We are already in touch with the Department of Investment and Public Asset Management (DIPAM) to understand all the processes involved. The LIC Act will have to be amended. It’s not possible to do it in six months and may take around one year,” Finance Secretary Rajiv Kumar said in a media interaction on Sunday.

Kumar said the idea behind the listing of LIC was to “bring in more transparency and allow the company to share gains with its stakeholders”. “It is very important as it will bring in the disclosure norms,” he said.

The sovereign guarantee for all policies issued by LIC will continue, the secretary added.

A top government official said the enterprise value of LIC was roughly ~36 trillion “according to the latest figures in the balance sheet”. The official said the government might not dilute “more than 10 per cent” in LIC. “It will certainly be less than 10 per cent,” the official added.

The government might seek exemption from the Securities and Exchange Board of India (Sebi) to offload less than 10 per cent in the initial public offer (IPO).

All companies are required to offer at least 10 per cent in the IPO. Finance Minister Nirmala Sitharaman had announced a stake sale in LIC through an initial public offer in the Union Budget of 2020-21.

The government aims to mop up ~90,000 crore from the listing of LIC and stake sale in IDBI Bank. The government currently owns 100 per cent in LIC.

On the stake sale of IDBI Bank, which is substantially owned and controlled by LIC, Kumar said the government was exploring various options, including a strategic stake sale. The government currently holds around 46 per cent in IDBI Bank.

“It is proposed to sell the balance holding of the government in IDBI Bank to private, retail and institutional investors through the stock exchange,” Sitharaman said during her Budget speech on Saturday.

IDBI Bank had become a private bank last year when LIC acquired a controlling stake in it.

THE IDEA BEHIND THE LISTING OF LIC IS TO BRING IN MORE TRANSPARENCY AND ALLOW THE COMPANY TO SHARE GAINS WITH ITS STAKEHOLDERS RAJIV KUMAR,

Finance Secretary