Page 14 - The Insurance Times July 2020

LIC of India

News

Govt invites bids for LIC According to Fitch Ratings, the pro- ers, field workers and class III employ-
posed IPO will improve the account- ees said the move to sell equity of the
IPO ability and transparency of the insurer will impact the economy.
The Central government has invited country's largest insurer and benefit In a letter to the Union Finance Minis-
bids for two pre-IPO transaction advi- the insurance industry. ter Nirmala Sitharaman, the three
sors for LIC.
The report by Fitch released in Febru- unions - Federation of LIC Class I Offic-
The last date for bids is July 13. Gov- ary viewed that "the procedural and ers' Associations, National Federation
ernment-owned LIC's public offer is legal bottlenecks in terms of amending of Insurance Field Workers of India and
expected to be the largest ever in In- certain sections of the LIC Act, con- All India Insurance Employees' Associa-
dia. ducting independent valuations as well tion- requested her to withdraw invi-
as obtaining regulatory approvals may tation of bids for appointing pre-Trans-
The criterion for applying is that the
delay the execution beyond the action advisors for LIC's initial public
bidder should have advised, handled,
government's target deadline of end- offering (IPO) and reconsider the deci-
and completed at least one transac-
March 2021". sion of disinvestment in LIC.
tion of IPO of a size of Rs 5,000 crore
or more between April 1, 2017 and According to Fitch, "LIC is one of the The three unions wrote to Sitharaman
March 31, 2020. prominent institutional investors in after reports appeared in the media
several public sector assets, and in with the Department of Investment
Or it should have managed a capital
multiple instances has obtained excep- and Public Asset Management
market transaction of Rs 15,000 crore
or more during the period. tions from the insurance regulator to (DIPAM) issuing a Request for Proposal
increase its stake in investee compa- (RFP) regarding engagement of pre-
The government is looking at listing nies above the regulatory ownership Transaction Advisors for assistance in
the country's largest life insurer on cap of 15%." the processes related to the IPO of LIC.
domestic bourses in the January-
It also said: "In addition, we believe Referring to their earlier letters to
March quarter of current financial
that the proposed IPO, once executed, Sitharaman, the Unions said: "Our ar-
year.
could broaden the insurer's capital guments against the equity sale are
This is part of the government's divest- base and improve its regulatory capi- not on any partisan interests but are
ment plans for state-backed firms such tal position, which was 160% at based on the interests of the national
as Air India, Bharat Petroleum Corpo- March-end 2019, slightly above the economy and the Indian society."
ration Limited (BPCL) and Concor. regulatory minimum of 150%."
"We had hoped that the government
On February 1 this year, the govern- would give a serious look at our argu-
ment had proposed LIC IPO, which LIC unions urge finance ments and would give us an opportu-
would be a major part of its highest- minister not to divest nity to present our case considering the
ever divestment target of Rs 2.10 tril- fact that the employees are one of the
lion (about $29.36 billion) set in the stake in LIC most important stakeholders in the
Union Budget for 2020-2021. Three unions in LIC representing offic- institution. We are disappointed that

14 The Insurance Times, July 2020