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India plans to take largest state-owned insurer public this year

A man wearing a protective face mask walks past a Life Insurance Corporation Of India (LIC) branding at a bus stop in Mumbai.

Ashish Vaishnav | SOPA pictures | LightRocket | Getty Images

One of India’s largest planned IPOs – the state-owned Life Insurance Corporation – is on its way to March, the country’s tax minister told CNBC.

Although the size of the float is still unknown, a successful IPO for India’s largest insurance company could go a long way in helping the government achieve its disinvestment targets for the fiscal year ending March 31.

“I think at the moment the idea is to bring it out in March and raise the money also in the month of March,” Tarun Bajaj, India’s revenue secretary, told CNBC’s Tanvir Gill. “I think we will exceed the revised estimate figures mentioned in the budget documents.”

During this week’s budget announcement for the fiscal year, which begins on April 1, the government set a modest investment target of Rs 650 billion ($ 8.7 billion). For the current year, it downgraded its target from 1.75 trillion rupees to 780 billion rupees.

Bajaj explained that it will not be a “life-and-death problem” if the LIC share sale happens in April instead of March. “We will earn more in the next financial year and I think a lot of resources are needed in the next financial year,” he added.

Local media, quoting a government official, reported that the Indian government could submit an IPO prospectus for LIC to the Securities and Exchange Board of India next week, which will reveal more details about the size of the deal.

Official data showed that in the current financial year, the government has so far raised around 120.3 billion rupees in disinvestment – which is still significantly lower than the revised target.

In October, India successfully sold the loss-making national flagship Air India to Tata Sons, the holding company of one of the country’s largest conglomerates, the Tata Group.

Bajaj told CNBC that the government has a number of disinvestment agreements in the pipeline that could be concluded in the next fiscal year and help it reach the modest target of Rs 650 billion, including Bharat Petroleum Corporation Limited, Shipping Corporation and Container Corporation of India.

“If we are able to close these deals, I’m sure we’ll be able to achieve the goals,” he said, adding that New Delhi was looking at strategic disinvestments to fund some of its spending.

“Strategic disinvestment is a bit complicated and each of the agreements is quite complex, as we have seen in the Air India experience,” he said. “But with Air India and a few others going through this current year, we’ve learned a lot in the process.”

“In the coming years, we should be able to do that much faster and we will achieve the goals,” he added.

To date, the largest IPO in India so far was Paytm’s share sales of $ 2.5 billion, which was about 186 billion rupees, based on current exchange rates.

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