The impending crisis in Ukraine is threatening to throw world economies in a spin, but the Government of India is firm on going ahead with the planned IPO of Life Insurance Corporation of India (LIC), said Finance Minister Nirmala Sitharaman in Mumbai on Tuesday (February 22).
Sitharaman said there is a lot of buzz in the market for the upcoming initial public offering and therefore the government will go ahead with it in the present financial year.
The FM is in Mumbai on a two-day visit to meet industry leaders, trade and financial market stakeholders as part of her post-Budget interaction sessions.
On tax relief on crude oil, the FM said, “International worrisome situations where we actually voiced that we wanted a diplomatic solution for the situation that is developing in Ukraine, all these are headwinds. Crude is one of the important considerations. We’ll have to see how it goes. We are keeping a watch.”
Sitharaman refused to comment on whether adequate regulatory action was taken on corporate governance lapses at the National Stock Exchange outlined in a recent Securities and Exchange Board of India (Sebi) order. “I am yet to get to the bottom of what is available before me. I am looking into it (NSE issue), but I won’t be able to comment on it,” she said.
On debates around GST compensation from the Centre to states, Sitharaman said, “The GST Council has taken a call on collecting compensation cess until March 2026. This will make up for the 2020 gap that arose in compensation. This extension in GST compensation collection will also be used to pay interest on the borrowed money,” the FM said.
On February 13, the state-owned insurer filed draft papers with capital markets regulator Sebi for the sale of a 5 per cent stake by the government for an estimated Rs 63,000 crore.
“Now that DRHP (for LIC IPO) is out, there is a buzz and a lot of interest in the market. I am glad the way in which it is crafted where shareholders also have a role to play. The way it has been crafted has created a lot of interest and we will be going ahead with it,” Sitharaman told reporters. When asked whether the IPO will come in this financial year, Sitharaman said, “DRHP is not issued two years in advance. Is it?” DRHP refers to Draft Red Herring Prospectus.
Also read: LIC — All you need to know about the mother of all stock IPOs
LIC IPO is entirely an Offer for Sale (OFS) through which the Government of India would dilute 5 per cent of its stake by selling 31.63 crore shares. Employees and policyholders of the insurance behemoth would get a discount over the floor price. On Monday, LIC chairman MR Kumar said the insurance behemoth was watching the geo-political situation carefully, though it was keen on listing the IPO in March. “We are watching the situation closely and carefully…but we are very keen on having a listing in March,” Kumar had said when asked about the impact of the evolving geopolitical situation on the upcoming IPO.
Meanwhile, on Tuesday, LIC clarified that subscribers of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) are not eligible for shares at a discounted price in the IPO. “It is a group insurance product and (PMJJBY policyholders) isn’t eligible,” LIC said in a statement.
The clarification came a day after Kumar said PMJJBY subscribers are also eligible for the benefits available for policyholders. However, LIC said in the statement that it was “inadvertently mentioned”. As per the DRHP filed last week, the maximum bid amount under the Policyholder Reservation Portion by an eligible policyholder would not exceed Rs 2,00,000 (net of policyholder discount). LIC’s share capital was raised from Rs 100 crore to Rs 6,325 crore during September last year to help facilitate the IPO. Last month, LIC reported a profit after tax of Rs 1,437 crore for the first half of the financial year 2021-22 as compared with Rs 6.14 crore in the year-ago period.