The state-run insurer is expected to file draft papers for its IPO sometime in February or March. The draft prospectus will detail the value of the LIC and the number of shares on offer. The valuation of the LIC is estimated to be around Rs 15 lakh crore.
However, there are certain restrictions that would hamper foreign investment. The FDI in the IPO will be limited to foreign firms.
The FDI policy has to be modified to make it easier for the IPO process. The Reserve Bank of India defines FDI as the purchase of 10% or more of a listed firm by a foreign investor. FDI clearance in the LIC would allow global funds to participate in the IPO and will also open the doors for major stake purchases after listing.
According to industry department secretary Anurag Jain, the current FDI policy would not help the disinvestment process.
The Government is working on a new FDI policy for the insurance sector. The Department of Promotion of Industry and Domestic Trade has stated that the government is putting the finishing touches on its e-commerce and national retail policies.
The new FDI policy will only allow FDI in the market model. It is not clear when the policy will be finalised, but the government has been very supportive of the LIC IPO.
While the FDI policy does not permit foreign investments in the life insurance sector, it does allow 74 per cent of foreign investment through the automatic route. While the LIC Act does not allow foreign investment, the new FDI policy will allow foreign portfolio and direct investment. The new policy must be in sync with Sebi norms to enable the IPO process.
A new FDI policy will be introduced to facilitate the LIC IPO. The new FDI policy will enable foreign investors to buy up to 10% of a listed company, or invest up to $100 million in an unlisted firm. A further major change is expected to be announced before the end of the current financial year. If approved, the IPO will be facilitated by the simplification of the existing FDI policy.
The government has decided to come out with a revised FDI policy to facilitate the IPO of LIC. The existing FDI policy does not permit foreign investments in the insurance sector. The company is currently operating under the automatic route, which allows for 74 per cent of FDI. The proposed LIC IPO will need to be in alignment with Sebi norms in order to get approval from the government.
The current FDI policy will not allow foreign investors to invest in the LIC. The government will review the FDI policy and decide if it is suitable to the IPO of LIC. The IPO of LIC will be one of the largest in the world and will be a major boost to the economy. The disinvestment of a life insurer like a LIC is not possible with the current FDI policy.
The FDI policy allows foreign investment in the insurance sector up to 74%. However, the FDI rule does not apply to LIC. The LIC Act does not allow foreign investments, so the proposed IPO must be compliant with the Sebi norms. It will also allow the LIC to attract foreign investment, which is necessary for the IPO to succeed.
The Indian government is reportedly working on a revised FDI policy to facilitate LIC’s IPO. Currently, it allows 74 per cent foreign investment in the insurance sector. The FDI policy does not apply to LIC, as the company is governed by a separate law. The FDI rules are also not applicable to LIC’s IPO.
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