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The LIC way or the Air India way: A tale of two suboptimal paths

One path waits for the company to go bankrupt while the other continues to subject it to government whim, writes T N Ninan

LIC IPO | Air India | Disinvestment

T N Ninan 

T N Ninan

Consider two recent sales by the government — of wholesale to the Tata group, and shares in Life Insurance Corporation (LIC) to retail investors. LIC’s offer price was at a fraction of the metrics at which private sector rivals are valued (typically, in relation to what is called embedded value). Yet its share has fallen since listing — a history that has bedevilled government companies before, like Coal India. In contrast to LIC, which remains 96.5 per cent owned by the government, has been fully privatised. An earlier offer to sell while the government continued to own some shares found no takers. Even with all the shares on offer, the sale happened only because the government more or less wrote off about Rs 50,000 crore. Most people now expect the airline to perform better.



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First Published: Fri, May 20 2022. 19:00 IST