In her Budget 2021 speech, Finance minister Nirmala Sitharaman announced that the initial public offering of Life Insurance Corporation of India (LIC) will be launched in FY22. Further she said that legislative amendments to this effect will be introduced in the Parliament in the Budget session.
Budget 2021: LIC IPO To Be Launched In FY22
The government is planning to divest 25% of its holding in LIC in multiple tranches. Before the IPO, if LIC is able to reduce its holding in IDBI Bank, it would result in unlocking of value as well as enhance the embedded value and thereby the public-sector insurer's valuations in the market.
Now to gear up the LIC IPO process, the first step is determining its embedded value and then the insurance company will need to pare its stake in other listed companies to less than 15%. Thereafter the LIC Act will be amended. The insurer had a balance sheet of Rs 32.8 lakh crore as of Q1FY21. The centre is yet to appoint an actuarial firm for determining embedded value of the insurer.
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