Today is a very special day for India’s largest insurance company Life Insurance Corporation of India i.e. Life Insurance Corporation of India (LIC). LIC Act was passed by Parliament on 19 June 1956 and under this LIC was established on 1 September 1956. Since then LIC has grown into the largest insurance company in India. Now coming to the situation today. The central government is preparing to bring the Initial Public Offer (IPO) of LIC. In July itself, the Economic Affairs Committee of the Union Cabinet has approved the IPO of LIC. After the IPO, the company will be listed in the stock market of India. This is expected to meet the disinvestment target of the government.
Earlier Milliman Advisors was appointed to calculate the price of LIC. One of the 16 merchant bankers, including global companies HSBC, Goldman Sachs, Bank of America, Citigroup and BNP Paribas, will manage the company’s public issue. Its name will be decided soon. A group of ministers will work out an alternative framework for strategic disinvestment, in which the offer figure will be decided.
This is the big talk of LIC’s IPO. Now the question arises that why LIC’s IPO is coming? If you have an LIC policy, will you get any benefit from this IPO? Know the answers to these and other similar questions
Why is LIC’s IPO coming up?
The central government had set big targets for disinvestment in the last few years, but it could not be met. Efforts to sell stake in Air India and BPCL are being postponed due to many other reasons including Kovid-19. It is expected that in this financial year, the government can move forward in this direction.
As far as the current financial year 2021-22 is concerned, the government has set a target of earning Rs 1.75 lakh crore through disinvestment. This will be completed only if LIC’s IPO is successful. Till now the date of LIC’s IPO has not been decided, but it is expected that it will get listed in the third or fourth quarter.
How much does the central government want to earn from this IPO?
Chief Economic Adviser K. Subramaniam had said in March that LIC’s IPO could earn up to Rs 1 lakh crore for the government. Major changes have been made in the LIC Act 1956 to move forward on IPO and listing. How many shares will be sold and in which price band they will be, it has not been decided yet. With the change in the law, the authorized share capital of LIC 25 thousand crores has been divided into 2,500 crore shares worth Rs 10.
The central government plans to sell stake in National Fertilizers, Mishra Dhatu Nigam and Rashtriya Chemicals and Fertilizers through Offer for Sale (OFS) ahead of LIC’s IPO.
