People waiting for the IPO of Life Insurance of India (LIC), the country’s largest insurance company, are waiting for a long time. Sources associated with the matter said that the possibility of LIC’s IPO coming this year is slim, as the central government has not yet completed all the necessary procedures for this.
Even if the government completes all the processes, it will still take at least 6 months to launch the IPO. According to the report, it seems difficult to have LIC’s listing in the stock market this year. The central government has set a target of raising Rs 1.75 lakh crore through disinvestment in the general budget presented for the financial year 2021-22.
To meet this disinvestment target, the IPO of LIC is very important this year. If LIC’s IPO does not come this year and Sarkara fails to complete the BPCL deal, the government will miss a big margin in achieving the disinvestment target.
Let us tell you that the Central Government had targeted to raise Rs 2.1 lakh crore through disinvestment for the financial year 2020-21. But due to LIC’s IPO not being launched and BPCL defaulting on privatization, the government was able to raise only Rs 32,835 crore. The first IPO of LIC was to be launched in FY21, but then it was scheduled for FY22.
Let me tell you that Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM), had said that the IPO of LIC will come after October, 2021. The DIPAM secretary had said that the central government has started the necessary preparations to start the process of disinvestment of LIC. But now it seems difficult to launch in October.
IPO will come after LIC valuation
Prior to the IPO of LIC, Milliman Advisor has been appointed for the valuation of the company by actuarial firm. Whereas, Deloitte and SBI Capital have been appointed as pre-IPO advisors. Modi Government plans to sell its 25% stake in LIC in several stages.
The government plans to sell only a 10 per cent stake in the first phase. The other stake will then be sold in multiple rounds. According to the current valuation, the central government can get between Rs 80,000 crore and Rs 1 lakh crore by selling its 10% stake in LIC.
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