LIC IPO: Govt appoints 10 service provider bankers to handle preliminary public providing

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The government has hired 10 commercial bankers, including Goldman Sachs (India) Securities, Citigroup Global Markets India, and Nomura Financial Advisory and Securities India, to manage the mega IPO of the country’s largest insurer, LIC.

Other selected bankers include SBI Capital Market, JM Financial, Axis Capital, BofA Securities, JP Morgan India, ICICI Securities and Kotak Mahindra Capital Co Ltd, according to a circular posted on the divestment department’s website.

“The government finished the book with lead managers and a few other advisors for LIC’s IPO,” tweeted DIPAM Secretary Tuhin Kanta Pandey.

The divestment department had filed applications for the appointment of merchant bankers on July 15. Following this, 16 merchant bankers gave presentations on the management of the listing and partial divestment of Life Insurance Corporation (LIC).

The Department of Investment and Public Asset Management (DIPAM) is also in the process of appointing a legal advisor to sell the shares, and the deadline for submitting bids is September 16.

Insurance company Milliman Advisors LLP India has already been hired to assess the embedded value of LIC ahead of its IPO, which is expected to take place in the January-March quarter of 2022.

The government is also considering giving foreign investors a stake in the country’s largest insurer, LIC. Under the rules of the Sebi (Securities and Exchange Board of India), Foreign Portfolio Investors (FPI) are allowed to buy shares as part of a public offering.

However, since the LIC Act does not contain any provisions for foreign investment, there is a need to adapt the proposed LIC-IPO to the Sebi standards regarding the participation of foreign investors.

The Cabinet Committee on Economic Affairs last month approved the proposal for the Life Insurance Corp of India to go public.

The Ministerial Board of Strategic Disinvestments known as the Alternative Mechanism will now determine the level of government divestment.

“The potential scope of the IPO is expected to be far greater than any precedent in the Indian markets,” the department said.

LIC listing will be vital for the government to meet its divestment target of Rs 1.75 lakh crore for 2021-22 (April-March).

So far this financial year, Rs.8,368 billion has been absorbed through the sale of minority interests in PSU and the sale of the SUUTI (Specified Undertaking of the Unit Trust of India) shares in Axis Bank.

Also read: India is considering foreign institutional investments of up to 20% in the LIC-IPO