New Delhi: The Union government is considering allowing a foreign entity, such as a pension fund or a sovereign fund, to directly invest money in the state-owned Life Insurance Corporation (LIC), which will enable a single foreign entity to buy a large stake in the LIC which is expected to be listed in the stock market in the current financial year, said a Bloomberg report.
According to the report, any such foreign direct investment (FDI), would be subject to a limit, which could be similar to the FDI limit applicable to public sector banks in which FDI investment has been capped at 20%.
In this year’s general budget, finance minister Nirmala Sitharaman had announced the government’s intent to bring an initial public offering (IPO) in the LIC, which is also the largest insurer in the country.
According to a note prepared by Jefferies India in February this year after the budget announcement, after the listing in the stock market, the LIC could be valued at $261 billion.
A 20% cap would mean the government might be able to fetch more than $50 billion from a direct FDI investment in the LIC. The report said the entities involved in arranging the LIC’s IPO were set to make a presentation to the government on Thursday.