Potential investors fret over India’s control of insurer

Prospective investors in Life Insurance Corp of India’s (LIC) $8 billion IPO are seeking assurances from company management that it will not sacrifice their interests to meet the goals set out by the government, its controlling shareholder, sources said.

In virtual roadshows for India’s biggest ever public listing, LIC management and the IPO bankers have been peppered with questions about the insurer’s past investments and their quality, four people with knowledge of the matter said.

LIC has in recent years been a key buyer of shares in state-owned firms sold off by New Delhi, often bailing out less-than-successful public issues of shares. It has also been tapped to rescue struggling financial institutions.

Potential conflicts of interest issues are taking centre-stage in the IPO roadshows that began last week and are expected to go on till the end of the month, the sources said.

“The government tends to act as a regulator, manager and shareholder and it tends to get its position confused at different points of time,” said Shriram Subramanian, founder of proxy advisory firm InGovern, who has not attended the roadshows.

“The government ministries may tend to think that LIC is 100 per cent under their control and would like to exert that kind of an influence whenever required and that is a concern for investors,” Subramanian added.