Though the green light is shown, Government may delay in floating the Mega Public Issue in light of International Turmoil and Geopolitical tensions

Security Exchange Board of India (SEBI), India’s Market Regulator, has accorded its approval to Life Insurance Corporation of India (LIC) to float its mega public issue. Earlier in February, LIC had filed the Draft Red Herring Prospectus (DRHP) for its Initial Public Offering with SEBI to sell a 5% stake in the firm. 

LIC, established in 1956, is fully owned by the Government. With around $40 trillion worth of assets in FY 2021-2022, 290 million policyholders, 2048 branches, and 11.48 lakh agents, the Company has the lion’s share in India’s insurance business. It is also the Fifth Largest Insurance Company in the World. 

With profits declining, the IPO is a milestone for the company. It shall benefit the Government in meeting its rising fiscal deficit and the target for disinvestment of Rs. 1.75 crore for FY21-22. It will also bring transparency in the affairs of the Company, and help bridge the gap between divestment targets and divestment receipts. The IPO has a 10% reservation for Policyholders too. 

As per its DRHP report, LIC is also aiming to undergo Digital Transformation, with a focus on data analytics, artificial intelligence, and digital underwriting and sale. 

The dates of the IPO have been further deferred for the next fiscal year which starts from April 2022, in light of international tensions and geopolitical turmoil arising out of the Russia-Ukraine Crisis. 

Earlier in 2022, Mr. M.R. Kumar, the Chairman of LIC was quoted saying, “We are watching the situation closely and carefully, but we are very keen on having a listing in March”. 

However, with the international crisis between Russia and Ukraine getting deeper, pushing the dates of the IPO further is the logical move by the Government. 

Russia invaded Ukraine officially on 24 February 2022 after several meetings and failed discussions between NATO and Russia.