Union Finance Minister Nirmala Sitharaman on Tuesday presented her fourth Union Budget in Parliament for the fiscal year 2022-23. In a key announcement, Sitharaman revealed that the public issue of Life Insurance Corporation of India (LIC) is expected shortly. 

"Life Insurance Corporation of India (LIC) IPO is in the works and will go public soon, and more divestments to take place in 2022-33 after Air India," she said during the presentation. 

The Finance Minister also highlighted that more divestments will take place in 2022-33 after the big Tata-Air India deal. As investors eagerly await the LIC IPO, here are more details of the announcement.

LIC IPO expected date

The Budget for 2021-22 had set a disinvestment target of Rs 1.75 lakh crore, as against Rs 32,835 crores garnered in the last fiscal. So far, only Rs 9,330 crore has been mopped up through minority stake sales in PSUs. Of the Rs 1.75 lakh, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, while the remaining will be CPSE disinvestment receipts.

This suggests that the LIC IPO is crucial for meeting the disinvestment target set for the fiscal year ending March 31, 2022. Given this estimate, it is estimated that the LIC IPO will go public in the first quarter of the year, and likely before March-end. 

LIC IPO registration for policyholders

So far, the government has not expounded on the details of the LIC IPO resignation, or what it would entail for investors and/or policyholders. As per a public notice issued in December 2021, to participate in any public offering, LIC policyholders will need to ensure that their PAN details are updated in the Corporation's records. As per the proposed plan, up to 10 percent of the LIC IPO issue size would be reserved for policyholders.

"In order to participate in any such public offering, policyholders will need to ensure that their PAN details are updated in the Corporation's records. Further subscribing to any public offering in India is only possible if you have a valid DEMAT account," LIC said in a public notice.

"You would incur costs towards opening of a DEMAT account and or PAN issuance and maintaining the DEMAT account or other ancillary costs. All such costs would have to be solely borne by you. No costs would be borne by the Corporation," it clarified.

Reports have also suggested that the Centre is mulling allowing foreign investors to pick up a stake. This move would not be possible unless LIC IPO is aligned with Sebi norms on foreign investor participation. The LIC currently has no provision for foreign investments.