To allow large foreign portfolio investors (FPIs) to subscribe to shares in the public listing of the insurance behemoth, Life Insurance Corporation (LIC), the government has amended the rules of Foreign Exchange Management Act (FEMA).
Here Is Your 5-Point Guide To The Delayed-LIC IPO Story
The FEMA notification is required to operationalise the already approved and revised Foreign Direct Investment (FDI) policy to facilitate 20 per cent overseas investment in the mega initial public offer (IPO).
That FEMA rules amendment notification suggests the insurance behemoth’s delayed-public offer could likely be coming soon, with reports suggesting late April or early May listing. The government has time until May 12 to launch LIC’s IPO without filing fresh papers for approval with the Securities and Exchange Board of India (SEBI).
The SEBI has approved the LIC IPO papers and 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.
While the government may consider a little more than the 5 percent stake sale at the LIC IPO, it not likely to reduce its stake significantly in LIC for at least 2 years following the insurers listing, because such a move could affect returns for investors participating in the mega IPO.
Even at a 5 per cent stake sale , 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).