LIC IPO News: Union cabinet approves 20% foreign direct investment

LIC IPO News: In a latest update, the decision has been taken in the union cabinet regarding foreign investment in LIC. The foreign investment proposal up to 20 per cent has been approved. 

Zee Business reporter Ambarish Pandey reported that all corporations including LIC will have such provision of FDI  for them in future also.

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Under current rules, foreign investment is not allowed in the LIC, governed by the special parliament act, while 74% foreign direct investment is allowed in other private insurance companies, as per a Reuters report. 

The amendment would allow the government to raise the foreign direct investment limit in the LIC up to 20%, on par with the rule for state-run banks, the government source said to Reuters. 

The cabinet decision comes amid growing fears among some investors that the government could defer public listing of the LIC due to increasing volatility in the market after Russia`s invasion of Ukraine.

Government officials, have however, said that there was no plan to defer the listing of the insurance company - critical for plans to raise funds for budgeted 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 portion reserved for employees will not be more than 5% of post-offer equity share capital, according to the IPO filing. LIC employed 114,498 people as of end-March, 2021.

LIC, which was formed six decades ago when India`s insurance sector was nationalised, straddles the business in the country, with more than 280 million policies and over 60 per cent of the insurance segment.