Government with plans to sell 25% stake in LIC in phases

The government is seeking cabinet approval to sell a 25% stake in LIC, the country’s largest life insurance company. It is learned that the central government is planning to raise Rs 2.1 lakh crore through share sale this year as part of efforts to keep the fiscal deficit below 3.5 per cent of GDP.

The government plans to amend the law in Parliament to sell LIC shares. No further details are available as the discussions are private. The timing of LIC’s initial public offering will depend on market conditions. According to sources, the sale will be implemented in various phases. The sale of shares in LIC will help boost government funding as the corona virus epidemic stagnates in the country and reaches a fiscal deficit of 3.5% of GDP for the year ending March 2021.

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Last month, Bloomberg News reported that the government had selected Deloitte and SBI Capital Markets Ltd to help prepare for the initial public offering of Life Insurance Corporation. According to a tender document released in June, financial advisers will help the company assess the capital structure of India’s largest insurer and revise its financial statements. As part of the proposal, the government will amend Parliament to an approved capital of Rs 20,000 crore, which will be split into 20 billion shares, sources said.

Subsequent sources said a ministerial panel set up for the sale of assets would decide the size of the public offer and the cabinet would consider changes in the insurer’s capital structure.

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