Business Desk, AnyTV, New Delhi
Published by: Deepak Chaturvedi
Updated Sat, 26 Feb 2022 02:41 PM IST
Summary
FDI up to 20 percent has been allowed by the government for LIC IPO. This big decision has been taken in the cabinet meeting held on Saturday. Significantly, LIC is preparing to launch the country’s biggest IPO in March. Its size can be 63000 crores. The government will sell its 5 percent stake through this.
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Expansion
will open the way for foreign investment
It is worth noting that earlier it was expected that the government may change the FDI rules to attract investors. According to the current FDI policy, 74 percent foreign investment is allowed in the insurance sector through the automatic route. But, this rule does not apply to LIC. The reason for this is that there is a separate act of the government for LIC, which is called LIC Act. After this decision, the way for foreign investment in the proposed IPO of LI will open.
IPO may come in March
The cabinet had approved the initial public offering (IPO) of the country’s largest insurance company LIC in July 2021 last year. The draft document for this was submitted to market regulator SEBI on February 13 and is expected to be launched in March. According to the report, LIC’s IPO will be the biggest IPO in the country so far. Through this, the government will sell its five percent stake. The size of this IPO can be Rs 63,000 crore.
Reserve the share of employees-policy holders
It is worth noting that in LIC’s IPO, 10 percent of the share can be reserved for policy holders, while five percent can be kept in reserve for the employees of the company. Let us inform that according to the draft document (DRHP) of LIC submitted to the market regulator SEBI, it has been clearly stated that if the policy holder does not update his PAN by 28 February 2022, then he will be eligible to participate in its IPO. will not be entitled.
Totally Offer for Sale IPO
This IPO of LIC will be the biggest IPO till date. As per the DRAP submitted to SEBI, the issue of LIC will be purely offer for sale. In this, the government will issue 31.6 crore shares under its 5 per cent stake. According to the report, according to this the embedded value of the company will be Rs 5.4 lakh crore. Normally the market cap of an insurance company is four times this value. According to this, the market value of LIC will be $ 288 billion i.e. about Rs 22 lakh crore and LIC will become the largest valued company of the country.