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Foreign investors will also be able to invest money in LIC’s IPO, clearing the way for FDI in government insurance company

LIC IPO: The government is preparing to clear the way for foreign investors to invest in LIC’s IPO. The central government is contemplating to allow FDI in the country’s largest insurance company. Negotiations are going on between the Ministry of Finance and the Department of Investment and Public Asset Management (DIPAM). In the existing FDI policy, 74% FDI is allowed in the insurance sector through the automatic route. However, this rule is not applicable in the case of LIC as it operates under a different LIC law.

Government will have to amend LIC Act

As per SEBI norms, FPIs and FDIs are allowed to invest in Public Offers (IPOs). But according to the law of LIC, there is no provision for foreign investment in it. Therefore, if foreign investors are also allowed to allow investment in LIC’s IPO, then the rules related to this will have to be amended. The cabinet had approved the IPO of LIC in July. This will be India’s biggest IPO. According to analysts of Jefferies India, the value of LIC can reach $261 billion after listing. The government can bring LIC’s IPO at the end of the current financial year. Deloitte and SBI Caps have been appointed as consultants for pre-IPO preparation. Many investment bankers will look after the work of LIC’s IPO.

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16 merchant bankers vying for IPO

At present, 16 merchant bankers are competing to manage LIC’s huge IPO. This week all these banks will give a presentation in front of DIPAM. This includes seven foreign investor banks like BNP PARIBAS, Citigroup Global and DSP Merrill Lynch.

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