LIC IPO: Making a big announcement, finance minister Nirmala Sitharaman has proposed a partial listing of Life Insurance Corporation of India (LIC) through an initial public offering (IPO). Modi government has decided to disinvest a part of its stake in LIC. At present, the government owns the entire 100 per cent stake in Life Insurance Corporation of India (LIC).
With a partial listing of LIC, it appears that the government is trying to boost the brand value of the insurer company. LIC is typically a big investor in share sales, including IPOs of state-run companies.
LIC listing could be the country's biggest initial public offering in recent times,as the government will list Life Insurance Corp of India in the next financial year starting April.
What public listing of LIC means for its policyholders?
Though LIC, IPO could become the country's biggest company by m-cap, will it do any good to its policyholders?
Experts say the listing of LIC policy can turn out to be a positive move for policyholders by the government. However, the benefits will be indirect.
According to Livemint, the listing will allow analysts to monitor LIC’s governance. LIC will come under Sebi’s direct watch and will have to comply with the requirements meant for other listed firms. Such compliance is likely to strengthen its overall corporate governance, financial and investment discipline.
"After being listed, LIC will be answerable to public shareholders and, hence, will be a prudent investment decision, which is good for policyholders. LIC will also become more competitive," he further added.
Speaking to Livemint, Founder of PlanRupee Investment Services, Amol Joshi said: "Any company going public is good news for stakeholders since it ensures higher transparency, better governance, more disclosures and scrutiny from the investors."
Meanwhile, the current year disinvestment could not go beyond Rs 18000 crore. The listing of the company is going to be complicated as it has huge investments in real estate, art and equity market, which may prove to be time-consuming for valuation purposes, an official said.
India's largest life insurer LIC's surplus for 2018-19 increased by 9.9 per cent to Rs 532.14 billion. This was the first time that LIC's surplus crossed the 500-bln-rupee mark.