India’s cabinet is said to have approved a proposal to allow overseas investors to own 20% of Life Insurance Corporation, according to a person with knowledge of the matter, a move which would facilitate foreign funds to participate in what’s expected to be the country’s biggest initial public offering.
The FDI will be under the so-called automatic route to expedite the capital raising process, the official said, declining to be identified because the information isn’t public. Investors can pick up the stake without the government’s approval under the automatic route.
India Seeks to Sell 5% Stake in Top Insurer’s Mega IPO
India is said to sell a 5% stake in the largest state-run insurer next month and may look to raise about 654 billion rupees ($8.7 billion). Prime Minister Narendra Modi’s government is relying on money from the LIC’s IPO to meet its budget deficit target for the financial year through March 2022.
LIC in its draft prospectus pegged the so-called embedded value, a key metric for insurers that combines the current value of future profits with the net value of assets, at 5.4 trillion rupees.
The government has been conducting roadshows with foreign investors across the globe, which comes at a time when markets have turned volatile amid tensions in Europe.
