LIC IPO Could Be Even Bigger With 25% Stake Sale

LIC with a proposal to sell close to 25% can be even bigger than proposed earlier. And retail investors will be better off investing to the issue, as they will get a pie of bonus as well as discounts.

"The Department of Financial Services under the finance ministry has floated a draft Cabinet note for stake sale in LIC to the ministries concerned, SEBI, IRDA and NITI," said one of the persons cited above. "Dilution of government shareholding from 100 percent to 75 percent in LIC in one or more tranches has been proposed," said one of the persons familiar with the matter.

The government is hopeful that the LIC IPO will bridge the huge deficit in revenue being faced by the centre owing to the coronavirus led disruption. Earlier 10% stake-sale in the state-run insurer was being mulled upon. For now, the government can go ahead with 10% stake sale and further stake can be divested in tranches.That is because the guidelines of capital markets regulator SEBI require that within three years of listing, the minimum public shareholding should be at least 25 percent, the persons cited above said.

Retail investors who subscribe to the issue can get up to 10% discount. And even LIC employees would be eligible for this discount.

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