Finance Minister Nirmala Sitharaman proposed to sell a part of Government stake in insurance behemoth, Life Insurance Corporation of India. The proposed stake sale will happen through an Initial Public Offer (IPO).

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LIC, fully owned by the Indian government, is typically a big investor in share sales, including IPOs of state-run companies.

"Listing of companies on stock exchanges disciplines the company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created," said Sitharaman.

The government now proposes to sell a part of its holding in the Life Insurance Corporation (LIC) by way of initial public offering (IPO)," she added.

The government has set a divestment target of Rupees 2.1 lakh crore for FY21 which compares to Rupees 1.05 lakh crore which was the target for the ongoing financial year. The market was estimating the Government to announce a fiscal target of around Rupees 1 lakh crore.

The higher divestment target for FY21 comes on the expectations of fundraising through LIC.

In November 2019, MR Kumar, LIC Chairman in his interview to a business channel had said that it’s too early for LIC to go public. He had also said that the insurer sees plenty of high growth from here despite the ongoing slowdown in the economy.

For the first nine months of FY’20, LIC recorded an increase in premium of 45.5 percent to Rs.137,034 crore. The private insurance sector, in the same period, saw premiums rise 20.7 percent to Rs.57,296 crore.

First Published:Feb 1, 2020 12:58 PM IST