Govt Can Sell 2-3% Stake In LIC To Private Investors To Meet Disinvestment ‘Targets’ – Trak.in

The central government appears to be contemplating to sell 2-3 per cent of its ownership in Life Insurance Corporation (LIC) as per the media report.

Govt Can Sell 2-3% Stake In LIC To Private Investors To Meet Disinvestment 'Targets'

Government Plans A Disinvestment In LIC

The central is planning to sell 2-3 per cent of its ownership in LIC in the coming times mostly depending on market conditions.

This initiative is under the government’s plan to reach the required 10 per cent public shareholding target by 2027.

The above-mentioned stake sale may be carried out in several smaller tranches rather than a single offering in the next fiscal year, as indicated in the media report.

This depends on the contingent on favorable market conditions, as the Centre aims to optimize the value of its ownership in the insurer.

Part Of a Divestment Strategy

Prior to this, the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance had called for proposals from merchant bankers and legal consultants.

The move is mainly focused on selling the minority stakes in certain public sector banks (PSBs) and financial institutions, such as LIC.

This is a part of a divestment strategy to be implemented over the next three years.

In a previous declaration, the state-owned insurance giant said that it was granted a three-year extension by market regulator Sebi to meet the minimum public shareholding requirements.

They have given a new deadline for LIC in which the insurer has to reach 10 percent public shareholding by May 16, 2027.

The SEBI regulations stipulate that all publicly listed companies must uphold a 25 percent public float hence raising the demand for divestment.

For the newly listed firms, they provide a three-year period to meet this requirement.

This changes for the firms that have a post-issue market valuation above Rs 1 lakh crore.

For them, the period to fulfill the 25 per cent minimum public shareholding (MPS) requirement is extended to five years.

A Huge Loss For LIC

In the meantime, IndusInd Bank share price crash burnt a hole in India’s biggest life insurer and domestic institutional investor Life Insurance Corporation’s (LIC) portfolio.

It has resulted in a loss of over ₹900 crore for the insurer.

This all started when IndusInd Bank’s share price crashed 27% on Tuesday, March 11.

It has witnessed its lowest level since November 2020, after the lender flagged accounting discrepancies in its derivatives portfolio, which is likely to have a one-time impact on its earnings.