Government of India has proposed to sell 5 per cent of its stake in the public insurer Life Insurance Corporation of India (LIC) via its much-awaited initial public offer (IPO), Minister of State for Finance Dr Bhagwat Karad told the Lok Sabha.

He also mentioned that the proposed LIC IPO will enable the government to realize the value of its investment in the public insurer, and position it to raise capital from the market for future growth. Karad underscored that the LIC IPO will improve governance via greater market discipline and transparency due to the listing requirements and disclosures.

He also explained, “These benefits, in turn, will equip the Government and LIC to pursue growth of the economy and the insurance sector and thereby to promote development and social protection.”

The Union Minister added that LIC invests in housing and supply (water supply, road, irrigation and power projects, among others). LIC had an outstanding investment of Rs 48,896.05 crore and Rs 2, 50,389.80 crore in housing (including real estate) and infrastructure sectors respectively as of December 31, 2021.

He stated that a sizeable proportion of the investment has been made indirectly via sector-specific investment instruments and details of state/UT-wise utilization of these investments are not maintained with LIC.

Meanwhile, the government has time till May 12 to launch the LIC issue with the current draft red herring prospectus (DRHP). If this deadline is not met, the valuation will have to be reworked and a fresh DRHP will have to be filed with the Securities and Exchange Board of India (SEBI) with updated financial results.