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Nirmala Sitharaman Talks About LIC IPO in Budget 2020-21

Insurance listing behemoth Life Insurance Corporation (LIC) will take place in the second half of the next fiscal year, Finance Secretary Rajiv Kumar said on Sunday. Finance Minister Nirmala Sitharaman has declared stake sales in the LIC through an initial public offer in the next fiscal year while presenting Budget 2020-21 on Saturday.

There are a variety of procedures that need to be pursued and some legislative changes would also be necessary for LIC listing, Mr 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 seems logical,” he said.

Listing LIC will bring greater transparency, public involvement and deepening of the equity market, he told PTI in an interview. Asked about the dilution number, Mr Kumar said it might be 10%, but so far no decision has been taken.

LIC Listing Focuses on Rs 90,000 Crore Disinvestment

The government aims to get Rs 90,000 crore out of the total Rs 2.10 lakh crore disinvestment target from the listing of LIC and stake dilution at IDBI bank in the next fiscal year. Actually the government owns 100 per cent of LIC and about 46.5 per cent of IDBI Bank shares.

“Listing of companies on stock exchanges discipline a company, provides access to financial markets and unlocks its value. It also gives an 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 (IPO),” Nirmala Sitharaman said in her Budget speech.

Market participants are pretty bullish about LIC and said it might be like the Saudi Aramco listing “the decade IPO.”

So, the 60-year-old state-owned company, LIC, is the largest insurer. It is in the country, controlling over 70 per cent of the market share. Also, the insurer has a market share of 76.28 per cent. Moreover, this is in a number of policies, and 71 per cent in premiums for the first year. Also, LIC has many branches including IDBI Bank. Last year it gained control stake at IDBI Bank.

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