IPO

Subject: Economy

Context:

The government is likely to amend the Life Insurance Corporation (LIC) Act, 1956 to facilitate the Initial Public Offering (IPO) of the country’s largest life insurer LIC.

Concept:

• The amendment in the LIC Act is required to achieve at least three objectives — to list as a corporation and not as a company, expansion of paid up capital and continuation of sovereign guarantee to shareholders.
• Once listed, an entity is required to have at least 25 per cent of public shareholding — shares owned by those other than promoters and include institutions and individuals after three years.
• The Budget documents show the government has set a disinvestment target of ₹1-lakh crore, of which ₹90,000 crore would come from the sale of IDBI Bank and LIC stake.

IPO:

• An IPO stands for initial public offering.
• It is when a company initially offers shares of stocks to the public.
• It’s also called “going public.”
• An IPO is the first time the owners of the company give up part of their ownership to stockholders. Before that, the company is privately-owned.