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Cabinet likely to consider proposal for FDI in IPO-bound LIC on Saturday – Times of India

NEW DELHI: The Union Cabinet is likely to consider on Saturday a proposal looking for modifications in the international direct funding (FDI) coverage to facilitate disinvestment of the nation’s largest insurer LIC, sources stated.
The division for promotion of business and inner commerce (DPIIT) has mooted the proposal after taking views from the finance ministry.
“The Cabinet will take up the matter tomorrow,” a supply stated.
According to the present FDI coverage, 74 per cent international funding is permitted underneath the automated route in the insurance coverage sector. However, these guidelines don’t apply to the Life Insurance Corporation of India (LIC), which is run via a separate LIC Act.
As per Sebi guidelines, each FPI and FDI are permitted underneath public supply. However, for the reason that LIC Act has no provision for international investments, there’s a want to align the proposed LIC IPO with Sebi norms relating to international investor participation.
The Cabinet had in July final yr accepted the preliminary public providing (IPO) of LIC and the stake sale is being deliberate for the present March quarter.
Setting the stage for the nation’s greatest-ever public providing, Life Insurance Corporation on February 13 filed draft papers with capital market regulator Sebi for the sale of 5 per cent stake by the federal government for an estimated Rs 63,000 crore.
The preliminary public providing of over 31.6 crore shares or 5 per cent authorities stake is likely to hit D-avenue in March. Employees and policyholders of the insurance coverage behemoth would get a reduction over the ground worth.
According to the draft pink herring prospectus (DRHP), LIC’s embedded worth, which is a measure of the consolidated shareholders worth in an insurance coverage firm, has been pegged at about Rs 5.4 lakh crore as of September 30, 2021, by worldwide actuarial agency Milliman Advisors.
Although the DRHP doesn’t disclose the market valuation of LIC, as per business requirements it could be about 3 times the embedded worth or round Rs 16 lakh crore.
The LIC public difficulty can be the most important IPO in the historical past of the Indian inventory market. Once listed, LIC’s market valuation can be comparable to high corporations like RIL and TCS.
So far, the quantity mobilised from IPO of Paytm in 2021 was the most important ever at Rs 18,300 crore, adopted by Coal India (2010) at almost Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

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