The government is preparing the listing of Life corporation of India(LIC) which is the largest life insurance company of India under IPO. The government is executing such preparations to quicken its disinvestment program and raise a huge amount in this financial year. If LIC was listed on the stock exchanges then it could easily become the country’s number one listed company according to the market value and will leave the current giant Reliance Industries and TCS behind.
The company had a profit of about Rs 48,436 crore in the last financial year. The company has an asset under management of Rs 31.10 lakh crore. Finance minister Arun Jaitley had stated in 2016 that if this company is listed in the stock market then it will be the most valued company in the country. According to market capitalization, Tata Consultancy Services (TCS) has the highest market capitalization which is around Rs 7.91 lakh crore, while Reliance Industries’s market cap is Rs 7.70 lakh crore.
Significantly, the government has announced in the budget that public holding in listed companies will be at least 35 percent. Earlier, the government had listed the issue of General Insurance Corporation and New India Assurance IPO two years ago in the stock market. When a company is listed for the first time in the stock market, an initial public offer ie IPO is issued for it. To bring the LIC into the stock market, the first thing is to change the LIC Act then only it can be brought under IPO.
In June last year, all life insurance companies raised a premium of Rs 16,611.57 crore from the new policy. LIC raised Rs 11,167.82 crores out of this. According to these figures, LIC’s market share stands at 74 percent. LIC is the only government insurance company in the country, which is constantly progressing despite growing competition.
When shares of a government company are falling due to the sale of the shares, or the buyers remain less then it is often seen that LIC buys these companies, which gives them support. LIC has holdings of millions of crores rupees of which it invests in many means. The government is in the process of listing the rural banks as well under IPO this year. Sources familiar with the matter said that after the consolidation, the government will list 3-4 regional rural banks in the current financial year.