The central government is not going to reduce its stake in Life Insurance Corporation of India (LIC) for at least 2 years. Because LIC’s IPO is about to come in the coming time. LIC is going to be listed on the stock exchange. In such a situation, if the government reduces its stake, then the returns of investors investing in IPO may be affected.
This stand has been expressed by the government among potential investors. Because many potential investors had sought information from the government that what would be the plan if the government’s stake in the insurance company decreases, following the rules of minimum public stake.
In such a situation, the government made it clear that it would not consider any equity dilution in the insurer for at least two years to avoid any pressure on LIC shares. Investors were informed that the insurer has sufficient capital for the next two years.
However, the government may consider a little more than 5 per cent stake in LIC’s IPO. But even with 5 per cent government stake, LIC’s IPO will be the biggest ever in the history of the Indian stock market. Once listed, the market valuation of LIC will be at par with top companies like Reliance India Limited (RIL) and Tata Consultancy Services (TCS).
The government has time till May 12 to launch the IPO of LIC without filing fresh papers with the Securities and Exchange Board of India (SEBI).