Government May Allow Foreign Direct Investment In IPO-Bound LIC: Report

The government is mulling allowing foreign direct investment (FDI) in the country's largest insurer LIC, a move which would help overseas investors take part in the company's proposed mega IPO

The government is mulling allowing foreign direct investment (FDI) in the country's largest insurer LIC, a move which would help overseas investors take part in the company's proposed mega IPO, sources said. The proposal is under discussion between the Department of Financial Services and Department of Investment and Public Asset Management (DIPAM). "Discussions have been going on for the proposal for the last few weeks. It would also go for inter-ministerial discussions and would also require Cabinet nod," a source said. According to the current FDI policy, 74 per cent foreign investment is permitted under the automatic route in the insurance sector. However, these rules do not apply to the Life Insurance Corporation of India (LIC), which is administered through a separate LIC Act. As per Sebi rules, both FPI and FDI are permitted under public offer. However, sources said since LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation. The Cabinet had in July approved the initial public offering (IPO) of LIC. The DIPAM had in January appointed actuarial firm Milliman Advisors LLP India to assess the embedded value of LIC ahead of the IPO, which is touted to be the biggest public issue in Indian corporate history.