India is considering a proposal for foreign investors to own up to 20% in Life Insurance Corporation, a person with expertise that would enable them to participate in the country’s largest public offering.
A plan is under discussion to change the FDI rules so that investors can pick up the stake via the so-called automatic route without government approval, the person said, asking not to be identified as the deliberations are private. Government officials are due to meet in New Delhi on Wednesday afternoon and discuss the proposal, the person said.
A Treasury Department spokesman did not immediately respond to calls for comment.
Prime Minister Narendra Modi’s government is relying on funds from the state insurer’s public offering to meet its budget deficit target for the fiscal year ended March 2022 as the pandemic hit tax collections. While most Indian insurers allow FDI of up to 74%, the rules do not apply to LIC as it is a special body created by an Act of Parliament.
The Reserve Bank of India defines FDI as the purchase of an interest in a publicly traded company of 10% or more by a foreign resident natural or legal person or any foreign investment in an unlisted company. The approval for FDI in LIC not only enables global funds to participate in the IPO, but also opens doors for a significant purchase of shares after the listing.
The government is targeting a valuation between Rs.8 trillion and Rs.10 trillion ($ 134 billion) for LIC and is considering a 5 to 10% stake sale that could raise between Rs 400 billion and Rs 1 trillion, Bloomberg reported earlier.
Banks began contacting investors last month, with a potential listing expected between January and March 2022.
This story was published through a news agency feed with no changes to the text. Only the heading was changed.
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