IPO-Bound Life Insurance Corporation Is Well Capitalised: Chairman M R Kumar

New Delhi: Life Insurance Corporation Of India (LIC), which is planning to launch the country’s largest IPO next month, is well capitalised, M R Kumar, company’s chairman, said on Monday.

He said LIC’s potential investors should not worry about government control after the IPO as decisions in the country’s largest insurance firm are taken by its board and not by the government, which will hold 95 per cent of stake after the listing.

The state-run insurer is planning to sell a 5 per cent stake to raise about $8 billion next month, which could make it India’s largest IPO by far.

“As of now, I do not believe that we require capital. Going forward if there is any growth capital requirement, we will approach not only the government but all the shareholders,” Kumar said, according to news reports.

Meanwhile, the LIC chairman has also said that the company would like to retain some stake in IDBI Bank so that the insurer continues to reap the benefits of the bancassurance channel.

IDBI Bank became a subsidiary of LIC with effect from January 21, 2019, following the acquisition of an additional 8,27,590,885 equity shares.

On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a Qualified Institutional Placement (QIP). The government, which is the minority shareholder in IDBI Bank with a 45.48 per cent stake, has already expressed its intent to exit by selling the stake.

"Going forward, we would like to have some stake in IDBI Bank. The whole idea of us picking up stake in the bank was strategic in nature and that has not gone away at all," Kumar said. “I, as LIC chairperson, would like to see that the relationship continuing in the future as well,” quoting Kumar, PTI reported.

Bancassurance is an arrangement between a bank and an insurance company allowing the latter to sell its products to the bank's customers and others through the branch network.