India government may allow as much as 20% foreign direct investment in the Life Insurance Corporation of India (LIC).
The decision would allow a single investor to buy up to a 20% stake in the IPO-bound life insurer.
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FDI, according to the country’s central bank Reserve Bank of India, is the purchase of a stake that is 10% or larger by an individual or company that is not based in India.
For most Indian insurers, an FDI of around 74% is allowed. However, LIC is an exception because it was created by an act of the Indian Parliament.
Required changes to the LIC Act of 1956 for the IPO have already been made by the government but it may have to amend some FDI rules too, according to Bloomberg.
The Government of India, which is seeking a valuation of approximately $109bn for LIC, is planning to divest a 5%-10% stake in the life insurer.
Up to 10% of the IPO issue size would be reserved for policyholders.
The report comes close on the heels of few reports which suggested India may block Chinese investors from buying shares in the LIC.
The Indian government is said to be cautious of Chinese ownership in LIC due to the political tension between the countries.
As per media reports, ten investment banks including Kotak Mahindra Bank, Goldman Sachs, JPMorgan Chase and ICICI Securities have been selected to manage the IPO.
The listing could happen by the fourth quarter of the financial year 2022.
