Goldman Sachs, JP Morgan among 16 in fray to manage LIC’s public offer

Shishir Sinha | | | Updated on: Aug 24, 2021

Issue expected to hit the market in the last quarter of FY22

The proposed Initial Public Offer of Life Insurance Corporation of India has attracted all key players for Book Running Lead Managers (BRLM) role.

Sixteen players have thrown their hat in the ring to be part of the team of merchant bankers to manage the IPO. The government proposes 10 BRLMs for this purpose.

The Finance Ministry has indicated that the issue will hit the market in the last quarter (January-March) 2021-22. The Department of Investment and Public Asset Management (DIPAM) has scheduled presentations from these 16 players in two batches.

Accordingly, BNP Paribas, Citigroup Global Markets India Pvt Ltd, DSP Merrill Lynch Limited (now BofA Securities), Goldman Sachs (India) Securities Private Limited, HSBC Securities and Capital Markets (India) Private Limited, JP Morgan India Private Limited, and Nomura Financial Advisory and Securities (India) Private Limited have been asked to make the presentation on Tuesday.

On Wednesday, Axis Capital Limited, DAM Capital Advisors Limited, HDFC Bank Limited, ICICI Securities Limited, IIFL Securities Limited, JM Financial Limited, Kotak Mahindra Capital Company Limited, SBI Capital Market Limited and YES Securities India Limited are scheduled to make a presentation.

BRLMs appointment

Once all the presentations are over, financial bids will be opened. Bidders with minimum qualifying marks will be permitted to participate in financial bids. Based on all these aspects, the government will select BRLMs.

The BRLMs, in consultation with the government, will form a syndicate, as required under the SEBI norms. The government will have the option of appointing additional syndicate member(s), if necessary. BRLMs will structure the IPO under SEBI regulations, prepare the draft prospectus, complete all the statutory requirements, conduct pre-market surveys, organise roadshows, arrange a meeting with potential investors, assist in pricing the IPO and allocation of shares, and provide after-sale support.

The government has already clarified that the potential size of the IPO is expected to be larger than any so far in the Indian markets. It said the listing of the shares of LIC would entail part-sale of the government’s stake and to raise fresh equity share capital. It is not yet clear what percentage of shares will be offloaded. However, the government did say that the percentage of paid-up equity to be issued/divested as part of the IPO will be determined based on the post-issue capital of LIC. A part of the public offering may be reserved for employees and policyholders.

Embedded value

The government has already notified all amendments to the LIC Act, 1956 to facilitate the IPO. Earlier, based on decisions by SEBI, the Finance Ministry notified relaxed norms for large companies planning to enter the stock market.

On December 31, the Government-appointed Milliman Advisors LLP India as the Reporting Actuary for the Embedded Value of LIC. The Indian Embedded Value measures the consolidated value of shareholders’ interest in the life insurance business. An IPO pre-condition, it must be determined by an independent actuary.

Bidders with minimum qualifying marks will be permitted to participate in financial bids

 

 

Published on August 23, 2021
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