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| Government unlikely to reduce its stake in LIC for at least 2 years | | |  The Centre is unlikely to reduce its shareholding in Life Insurance Corporation of India (LIC) for at least 2 years following the insurer's listing because such a move could affect returns for investors participating in the mega initial public offering (IPO).
The government's stance was communicated to prospective investors during roadshows after many sought clarity on the Centre's plan to lower its shareholding in the insurer to meet the minimum public shareholding norms.
To clarify, the Centre maintained that it would not look at any equity dilution in the insurer for at least two years to avoid any downward pressure on LIC's shares. Investors were informed that the insurer had sufficient capital for the next two years.
The government was expecting to garner over ? 60,000 crore by selling about 31.6 crore or 5 per cent stake in the life insurance firm to meet the curtailed disinvestment target of ? 78,000 crore in 2021-22.
Though, the government may consider a little more than the 5 percent stake at the LIC IPO.
Even at a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market. Once listed, LIC's market valuation would be comparable to top companies like Reliance India Limited (RIL) and Tata Consultancy Services (TCS).
The government has time until May 12 to launch LIC's IPO without filing fresh papers with the Securities and Exchange Board of India (SEBI). |
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