Keeping the government's plan to come up with the mega initial public offer (IPO) of insurance major, Life Insurance Corporation of India (LIC) in the ongoing financial year intact, the Cabinet committee of economic affairs (CCEA) has given in-principle approval to the IPO.
A top official source said that the CCEA, at its meeting on 7th July, approved the reworked plan for IPO finalised by the department of investment and public asset management (DIPAM), clearing the several impediments for the country's largest IPO.
"We have also fixed the way for the offer and how investors should be roped in to the insurer. With this, the road has been cleared for the IPO that in any case we were planning for FY21-22," the official said.
The highly placed source further told IANS that now the alternative mechanism (AM) or the group of ministers would sit to decide on the timing and quantum of shares to be offered. The appointment of managers for the issue will also follow.
Post the Union Budget FY21-22, the government has taken several legislative and executive steps to pave way for the mega IPO.
As per the amendments proposed under the Finance Bill 2021, the authorised share capital of LIC shall be Rs25,000 crore, divided into 2,500 crore shares of Rs10 each.
The capital market regulator Securities and Exchange Board of India (SEBI) has also eased the minimum public offer norms in a bid to pave the way for the LIC IPO.
In February, the board of SEBI has decided to recommend changes in regulations, and for issuers with post issue market capital exceeding Rs1 lakh crore, the requirement of minimum public offering (MPO) will be reduced from 10% of post issue market capital to Rs10,000 crore along with 5% of the incremental amount beyond Rs1 lakh crore.
The government expects to bring the IPO around Diwali this year.
According to the Chief Economic Adviser (CEA) KV Subramanian, the LIC IPO may fetch the government around Rs1 lakh crore.
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