LIC employees’ unions on Saturday opposed the Centre’s plan to sell a part of its shares in the state-run insurance behemoth through an initial public offer (IPO), insisting that the move is “against the national interest”.
Finance Minister Nirmala Sitharaman said the Life Insurance Corporation of India (LIC) will be listed as part of the government disinvestment initiative. The government proposes to sell a part of its holding in LIC through IPO, she said while unveiling the Budget 2020- 21.
“We strongly oppose the government’s plan to sell a part of its shares in LIC and the move is against the national interest,” a spokesman of an employees’ union told reporters here. Established in 1956, LIC is fully-owned by the central government and has the highest market share in the life insurance segment in the country.
He said that LIC has contributed a lot in the economic growth and the dilution of the government’s stake in the company will “endanger the economic sovereignty of the country“.
The employees’ unions of LIC across the country will stage nationwide protests if the government goes ahead with its plan, he said. He alleged that it will also affect crores of policy holders of LIC.
LIC will be IPO of the decade
Budget 2020 announcement that insurance behemoth LIC will be listed was well received by market participants who said this will be “IPO of the decade” akin to the Saudi Aramco listing.
A “highlight of the budget is the LIC IPO, which is akin to the Saudi Aramco listing for Indian capital markets, and will be IPO of the decade,” Vijay Bhushan, President, Association of National Exchanges Members of India (ANMI) said.
According to Krishna Kumar Karwa, Managing Director, Emkay Global Financial Services, the LIC IPO will be a big positive for corporate governance and transparency and will open up one more avenue for fund raising for the government over the years.
Metropolitan Stock Exchange, Interim CEO, Balu Nair said: “The LIC listing will be eagerly awaited by investors and will provide huge fillip to capital raising through the primary market.”
“The government will sell part of LIC through its listing in the stock market which is also a positive trigger for the market,” Amit Gupta, CO-Founder and CEO, TradingBells.
Jaideep Hansraj, MD and CEO of Kotak Securities said listing of LIC would help bridge a gap in the Fiscal Deficit for FY21.
Currently, the government owns the entire 100 per cent stake in LIC.