New Delhi: The cabinet on Saturday approved a policy amendment allowing foreign direct investment of up to 20% in Life Insurance Corporation of India.LIC), a government source said, a change aimed at easing the listing of a state-run insurer.
India’s largest insurer plans to hold a 5 per cent stake next month to raise around $8 billion for the South Asian country’s biggest ever initial public offering (IPO).
The government source, who spoke on condition of anonymity after the cabinet meeting, said the amendment would allow foreign direct investors to buy 20% of LIC’s shares through the automatic route.
Under the existing rules, foreign investment is not allowed in LIC, governed by a special Parliament Act, while 74% FDI is allowed in other private insurance companies.
The government source said the amendment would allow the government to increase the foreign direct investment limit in LIC to 20%, which is at par with the rule of state-owned banks.
The cabinet decision comes amid growing apprehensions among some investors that the government may postpone the public listing of LIC due to rising volatility in the market. Russiaattack of Ukraine,
Government officials, however, have said there were no plans to postpone the listing of the insurance company – crucial to the plan to raise funds for budget spending.
In the IPO, the firm will also earmark a certain percentage of shares for policyholders, not exceeding 10% of the offer size, while the share reserved for employees will not exceed 5% of the post-offer equity share capital. IPO filing. LIC employed 114,498 people till the end of March, 2021.
LIC, which was formed six decades ago when India’s insurance sector was nationalised, expands business in the country, with over 280 million policies and over 60% of the insurance segment.
India’s largest insurer plans to hold a 5 per cent stake next month to raise around $8 billion for the South Asian country’s biggest ever initial public offering (IPO).
The government source, who spoke on condition of anonymity after the cabinet meeting, said the amendment would allow foreign direct investors to buy 20% of LIC’s shares through the automatic route.
Under the existing rules, foreign investment is not allowed in LIC, governed by a special Parliament Act, while 74% FDI is allowed in other private insurance companies.
The government source said the amendment would allow the government to increase the foreign direct investment limit in LIC to 20%, which is at par with the rule of state-owned banks.
The cabinet decision comes amid growing apprehensions among some investors that the government may postpone the public listing of LIC due to rising volatility in the market. Russiaattack of Ukraine,
Government officials, however, have said there were no plans to postpone the listing of the insurance company – crucial to the plan to raise funds for budget spending.
In the IPO, the firm will also earmark a certain percentage of shares for policyholders, not exceeding 10% of the offer size, while the share reserved for employees will not exceed 5% of the post-offer equity share capital. IPO filing. LIC employed 114,498 people till the end of March, 2021.
LIC, which was formed six decades ago when India’s insurance sector was nationalised, expands business in the country, with over 280 million policies and over 60% of the insurance segment.
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