With the Government set to sell its stake in Life Insurance Corporation (LIC), the trade unions fear that the initial public offering (IPO) could result in job losses. One of LIC’s trade unions has stated that the IPO will adversely affect expenditure on social infrastructure, as LIC’s focus will shift towards investments that will maximise profits. The union maintains that the aim of LIC is to offer insurance to those in the rural areas and those belonging to the lower rungs of the socio-economic ladder.
The union, representative of about 4,000 employees, fears that LIC, which has been diligently investing in building roads, railways and power projects in the country for over six decades now, may, post IPO, begin concentrating on profit maximisation. Fearing that LIC may lose sight of the very purpose of its existence, the Union —one of LIC’s largest — plans to oppose the sale.
With the Government planning to dilute up to 10 per cent stake in LIC, and permit up to 20 per cent foreign institutional investment, the argument of the Union is that the sale of national assets will reduce recruitment and encourage outsourcing. Therefore, jobs will be lost.
In August, the Government selected 10 banks for the sale scheduled to take place between January and March next year. The Government hopes to raise up to Rs. 900 billion ($12.24 billion) from the sale of its stake.
Kotak Mahindra Capital Company, Goldman Sachs India Securities, JP Morgan India, ICICI Securities, JM Financial, Citigroup Global Markets India, Nomura Financial Advisory and Securities (India), Axis Capital, DSP Merrill Lynch, and SBI Capital Markets have been selected to help LIC manage the IPO.