LIC IPO Gets Cabinet Nod , FM Led Panel To Decide On Quantum Sale
- ByAyushi Ray | July 13, 2021
LIC IPO gets Cabinet nod , FM led panel to decide on quantum sale. The size of the IPO and the extent of the government’s stake dilution in the country’s largest insurer would be taken up by the Alternative Mechanism comprising Finance Minister Nirmala Sitharaman and Minister of Road, Transport and Highways Nitin Gadkari, among others. The Department of Investment and Public Asset Management (DIPAM) had in January appointed actuarial firm Milliman Advisors LLP India to assess the embedded value of LIC ahead of the IPO (Initial Public Offering), which is touted to be the biggest public issue in Indian corporate history. The Budget amendments to the LIC Act has been notified and the actuarial firm is expected to finalise the embedded value of the life insurer. Under the embedded value method, the insurance company’s present value of future profit is also included in its present net asset value.
“The Cabinet Committee for Economic Affairs last week cleared the proposal of initial public offering of LIC. The alternative mechanism on disinvestment will now decide on the quantum of stake to be divested by the government,” an official said.This is in line with a series of changes made by the government ahead of the proposed IPO. Last week, the Department of Financial Services (DFS) notified that the position of executive chairman of LIC would be gradually phased out and a post of chief executive officer (CEO) would be created. To make the functioning of the insurer driven by its board, several rules have been amended. The purpose is to empower the board to take decisions regarding pension schemes, among others. These changes have been undertaken to restructure the insurer in line with the listing guidelines of the Securities and Exchange Board of India (Sebi). The government is targeting the launch of LIC’s IPO in the last quarter of the financial year as it is yet to derive the embedded value of the insurer
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