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NEW DELHI: The government is evaluating the option for an overseas listing of Life Insurance Corporation (LIC), the country’s largest insurer, in what many believe will be a powerful signal to global investors.
The government has already announced its intent for an initial public offer (IPO) by the insurance giant, while also amending the Companies Act to allow Indian companies to directly list on foreign bourses.
Following the budget announcement, the government has appointed Deloitte and SBI Capital Markets as transaction advisors for the LIC issue, while also initiating the process to amend the LIC Act as the Centre is the sole shareholder under the law.
The LIC is in the process of appointing an actuarial firm to arrive at the corporation’s embedded value — a valuation measure used by life companies to determine the present value of earning that will continue to flow in the future from policies that have already been sold.
Sources told TOI that the enabling amendments are expected to be moved during the winter session of Parliament with the IPO likely earliest in the fourth quarter. Despite the amendments, the insurer will continue to be governed by the LIC Act, a source indicated.
Given the valuation, which will be in excess of Rs 11-12 lakh crore, a large issue within the country may not find sufficient buyers, making an international listing as an attractive proposition. While the government has to dilute a 25% stake in the company, the initial issue will be of a smaller size.
Initially, the proposal for a foreign listing was made internally within the government but has also found supporters outside. Some of the global stock exchanges have already made a pitch to the government to list the much-anticipated issue on these bourses but a final call has not been taken so far.
“It (an overseas listing) is under consideration but that decision will be taken later based on advice that the government gets from its advisors,” said a government source.
While several Indian banks and companies, including Infosys, HDFC Bank and ICICI Bank, have tapped global investors via depository receipts, none of the domestic companies have listed directly on foreign exchanges, something that was not allowed under the law.
In recent years, several Chinese companies have opted for the route that has not only helped widen the investor base but also create international appeal.
With the amendment in place, Reliance Jio was seen to be among companies that may list overseas with homegrown e-tailer Flipkart, now majority-owned by Walmart, seen to be another candidate. Flipkart is, however, registered in Singapore.
The government has already announced its intent for an initial public offer (IPO) by the insurance giant, while also amending the Companies Act to allow Indian companies to directly list on foreign bourses.
Following the budget announcement, the government has appointed Deloitte and SBI Capital Markets as transaction advisors for the LIC issue, while also initiating the process to amend the LIC Act as the Centre is the sole shareholder under the law.
The LIC is in the process of appointing an actuarial firm to arrive at the corporation’s embedded value — a valuation measure used by life companies to determine the present value of earning that will continue to flow in the future from policies that have already been sold.
Sources told TOI that the enabling amendments are expected to be moved during the winter session of Parliament with the IPO likely earliest in the fourth quarter. Despite the amendments, the insurer will continue to be governed by the LIC Act, a source indicated.
Given the valuation, which will be in excess of Rs 11-12 lakh crore, a large issue within the country may not find sufficient buyers, making an international listing as an attractive proposition. While the government has to dilute a 25% stake in the company, the initial issue will be of a smaller size.
Initially, the proposal for a foreign listing was made internally within the government but has also found supporters outside. Some of the global stock exchanges have already made a pitch to the government to list the much-anticipated issue on these bourses but a final call has not been taken so far.
“It (an overseas listing) is under consideration but that decision will be taken later based on advice that the government gets from its advisors,” said a government source.
While several Indian banks and companies, including Infosys, HDFC Bank and ICICI Bank, have tapped global investors via depository receipts, none of the domestic companies have listed directly on foreign exchanges, something that was not allowed under the law.
In recent years, several Chinese companies have opted for the route that has not only helped widen the investor base but also create international appeal.
With the amendment in place, Reliance Jio was seen to be among companies that may list overseas with homegrown e-tailer Flipkart, now majority-owned by Walmart, seen to be another candidate. Flipkart is, however, registered in Singapore.
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