LIC prospective investors wary of govt’ meddling in the insurer

The insurer was frequently tapped to save struggling financial firms.

Prospective inventors in Life Insurance Corporation of India’s (LIC) $8b initial public offering (IPO) are demanding assurance from company management that it will not sacrifice their interest to meet goals set out by the government, a report from Reuters said, citing unnamed sources.

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LIC management and the IPO bankers were given a barrage of questions about the insurer’s past investment and their quality.

In the past few years, the insurer was a key buyer of shares in state-owned firms sold off by New Delhi, and was often bailing out less-than-successful public issues of shares. It was also frequently tapped to rescue struggling financial institutions.

Sources said that potential conflicts of interest issues are taking centre-stage in the IPO roadshows that began last week and are expected to go on until the end of the month.

LIC recently filed draft papers with the government regulator to sell 5% of its shares, potential raising $8b, as India’s biggest IPO.