HomeCURRENT AFFAIRSBUSINESSModi government's big decision on LIC's IPO, 20% FDI approved

Modi government’s big decision on LIC’s IPO, 20% FDI approved

The government has taken a big decision today regarding LIC IPO. The Union Cabinet has changed the Foreign Direct Investment (FDI) policy to facilitate disinvestment in the country’s largest insurance company LIC. The Union Cabinet on Saturday allowed Foreign Direct Investment (FDI) up to 20 per cent in Life Insurance Corporation of India (LIC) under the automatic route. News agency PTI has given this information quoting sources.

To facilitate disinvestment, LIC has been allowed up to 20 percent FDO, the news agency reported.

As per the regulations of market regulator SEBI, both FPI (Foreign Portfolio Investment) and FDI are allowed under public issue offerings. Since there is no provision for foreign investment in the LIC Act, there is a need to make the proposed LIC IPO in line with SEBI norms with regard to foreign investor participation. The Cabinet had approved the initial public offering of LI in July last year. LIC has applied to the market regulator SEBI for this issue.

This is the third largest IPO of an insurance company in the world. Five other domestic and global investment banks including SBI Capitals, Citigroup, Nomura, JP Morgan and Goldman Sachs are the book running lead managers for the IPO. Five percent of the LIC IPO has been reserved for employees and 10 percent for the insured. A total of 35 percent of the LIC IPO is for retail investors. That is, those who have LIC insurance can bid for shares up to a maximum of Rs 4 lakh. He can bid in policyholder and retail categories.

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