Life Insurance Corporation (LIC) has the biggest share in life insurance business in India. It had not been opened to any initial public offering (IPO) to public for subscription, unlike many other prominent Public Sector Undertakings. However, with changing times and with intent to generate revenue using inherent brand value of LIC, it is well on course to come up with its first IPO in a week’s time.
In this context, foreign investors more often than not constitute one of crucial investors segment to scale up IPO prospects of any company seeking to tap the market. However, hitherto, there was no standard ruling dealing with foreign investment in the LIC under Life Insurance Corporation Act, 1956 or any other applicable legislations.
With the intent to permit foreign investors to take part in such IPO, the Central Government has amended non-debt instrument rules (Rules) under the Foreign Exchange Management Act (FEMA), to pave way for 20% FDI in IPO-bound LIC under automatic route.
The idea is to ensure maximum participation in India’s biggest-ever public offering so far.
This amendment to Rules under FEMA is crucial and instrumental in opening doors for foreign investors to participate in LIC’s IPO.
