The process of selling shares in Indian governmeng-owned insurance company LIC has gained momentum. LIC's IPO could receive cabinet approval this week, according to a report by Bloomberg News. The government wants to bring in an IPO to sell some of its shares in LIC by January 2022. However, many types of formalities need to be completed before an IPO.
Recently, it was reported that the central government may call for tenders from commercial bankers this month for the disinvestment management of LIC. In January 2021, a department of the Ministry of Finance assigned the actuarial firm Milliman Advisors LLP India to assess LIC's embedded value before the IPO. It is also believed to be the largest IPO in the country.
What will be the effect on policyholders?
It is said that 10 per cent of LIC's IPO will be reserved for policyholders. Minister of State for Finance Anurag Singh Thakur had given the information in February 2021. Even after the IPO, the central government will have the largest stake in LIC.
In fact, some legal reforms will also be required before LIC brings in an IPO. Deloitte and SBI Capital have been appointed as transaction advisors before the IPO of the country's largest insurance company.