LIC plans IPO by December

The country's biggest insurance company Life Insurance Corporation of India is planning to come out with an initial public offer by December 2005 to meet the stipulated IRDA norm of having a minimum paid-up capital of Rs 100 crore (Rs 1 billion).

Board level sources said on Tuesday that since LIC was formed by an act of Parliament in 1956 with a paid-up capital of Rs 5 crore (Rs 50 million) only and entirely subscribed by the government of India, the company would now have to infuse fresh capital as per the norm laid down by the regulator.

Although LIC was initially reluctant to infuse fresh capital by virtue of being the biggest insurance firm, the company had to ultimately fall in line since IRDA was an independent authority with no government intervention.

Sources said that the company was toying with the idea of diluting 26 per cent stake, while the government would retain the remaining 74 per cent.

However, the decision would have to be taken at the highest level for which approval of the Cabinet was required.

Sources said that the IPO was likely to be floated by December this year, adding that it would hit the capital market by the end of the current financial year surely.