Centre initiates talks with global investors over LIC business prospects

Move could be a precursor to further dilution of stake in the insurance major

The government has initiated talks with global investors over the business prospects of the Life Insurance Corporation (LIC), whose shares have got hammered after its listing in May last year.

Top bureaucrats of the finance ministry and the LIC management have started a series of meetings with large investors across geographies to understand their concern and convey to them that the markets could be undervaluing the stock. The move could be a precursor to a further dilution in stake in the insurance behemoth.

The government intends to sell a further 2 per cent in the LIC but a decision could be taken after next year’s general elections, it has been learnt.

The government holds 96.5 per cent in LIC.

“We are conducting non-deal roadshows in multiple countries to gauge investor feedback on the company’s listing,” a government source privy to the matter said. 

“We are interacting with investors in the US, the UK, Singapore and Hong Kong ... a few meetings happened last week ... and some more in different geographies will take place in a few days,” the source added.

“Non-deal” is an investor-relation exercise not related to any specific transactions.

The government is not satisfied with the insurer’s stock-market performance, he said, adding that any decision on a further dilution in LIC’s stake would be taken after reviewing its few quarters’ performance.

Shares of LIC are still 34 per cent below their initial public offering (IPO) price. So far this year, the stock has lost 8 per cent even as the Nifty has gained 4 per cent.

Last year, the government raised Rs 20,557 crore by diluting its 3.5 per cent in the LIC through the country’s biggest ever IPO.

LIC shares were listed on May 17 last year at a discount of 8.62 per cent, at Rs 867.20, on the BSE over the issue price of Rs 949.

The government sold over 221.3 million shares. 

The price band of the issue was Rs 902-949. However, shares were allocated to investors on May 12, 2022, at the upper end of the price band.