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The Appointments Committee of the Cabinet (ACC) has extended the term of Life Insurance Corporation (LIC) Chairman MR Kumar till March 13, 2022, the date he completes three years as the chief of the insurance behemoth.
Mega IPO
His currently notified term was to end on June 30 this year. The extension was widely expected, given that LIC is readying itself for a mega initial public offering (IPO), which is expected to help the government mop up close to ₹1-lakh crore in 2021-22.
It maybe recalled that Kumar was appointed as LIC Chairman on March 13, 2019. Kumar had joined LIC in 1983 as a direct recruit officer. In a career spanning nearly four decades, Kumar has headed three zones of LIC – Southern Zone, North Central Zone and Northern Zone.
The government had recently amended rules to specify that only Managing Directors of LIC will be eligible to appear for interviews to the post of LIC Chairman.
The Centre owns 100 per cent of LIC. It is looking to divest up to 10 per cent stake in the proposed IPO. Once listed, LIC will become the country’s largest company by market capitalisation, say capital market observers.
Bigger than Reliance Ind
LIC could get a value of $261 billion when listed, based on its assets under management and using private sector insurers, analysts at Jeffries India, led by Prakhar Sharma, had written in a note in February. That could make it bigger than Reliance Industries, which is India’s largest listed entity.
The government is widely expected to invite merchant bankers for the share-sale this month.
The government has already introduced amendments to the LIC Act to make it IPO-ready. Besides increasing the authorised capital of LIC to ₹25,000 crore from ₹100 crore to facilitate listing, there has been changes in the law to reserve a portion of IPO to existing policyholders.
In the just-concluded financial year FY21, LIC had recorded new business premium of ₹1.84-lakh crore, the highest ever in the history of the corporation.
LIC has been steadily losing market share to private players even as it had built a strong brand over the years. It has been reporting low shareholder profits as most of the profit is redistributed to policyholders and dividend payouts to the government are also high.
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