The sale of a 5% stake would make it India’s biggest-ever IPO.
LIC will file a draft red herring prospectus (DRHP) with SEBI for its IPO by November.
The IPO of the country’s largest insurer will be the largest IPO in Indian history.
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Those Appointed To Help With IPO
The government last month appointed 10 merchant bankers to manage the IPO, including:
- Goldman Sachs (India) Securities Pvt Ltd
- Citigroup Global Markets India Pvt Ltd
- Nomura Financial Advisory and Securities (India) Pvt Ltd
- SBI Capital Market Ltd
- JM Financial Ltd
- Axis Capital Ltd
- BofA Securities
- J P Morgan India Pvt Ltd
- ICICI Securities Ltd
- Kotak Mahindra Capital Co Ltd.
Cyril Amarchand Mangaldas has been appointed as legal advisor.
Next Steps
After the DRHP is filed, merchant bankers will hold global and domestic road shows for investors by January.
The government is aiming to list the insurance behemoth within the current financial year ending March.
The ministry is currently estimating the embedded value of the life insurer and has appointed actuarial firm Milliman Advisors LLP India to do so.
Once this is complete, the ministerial panel on disinvestment will decide on the government stake to be divested.
Foreign Players To Join?
The government is also considering bringing on board foreign investors to pick up stakes in LIC.
SEBI permits foreign portfolio investors (FPIs) to buy shares in a public offer.
However, the proposed LIC IPO has to be aligned with SEBI norms since the LIC Act has no provision for foreign investments.
IPO Significance
The listing will be crucial for the government to achieve its disinvestment target of Rs 1.75 lakh crore for 2021-22 (April-March).
So far this fiscal, it has received Rs 9,110 crore through minority stake sales in PSU and sale of SUUTI stake in Axis Bank.
It would use the money raised to address India’s budget deficit, which is forecast to be 6.8% this year.
It will also sell majority stakes in four other state-run firms — Air India, Bharat Petroleum Corp., Shipping Corp. of India and Container Corp. of India.
The Sheer Scale
It is being reported that the government is seeking a valuation of as much as 8 trillion to 10 trillion rupees ($135 billion).
At that level, the sale of a 5% stake would make it India’s biggest-ever IPO.
A 10% dilution would make it the second-biggest involving an insurer anywhere in the world.
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