LIC IPO: Govt begins process to take LIC public, invites bids from BRLMs, legal advisors

• The potential size of the (LIC) IPO is expected to be larger than any precedent in Indian markets, said DIPAM
• Once the valuation is done, book-running lead managers (BRLM) will help DIPAM in taking LIC public

New Delhi: Initiating the process for taking state-run Life Insurance Corporation of India (LIC) public, the Centre has floated requests for proposals (RfPs) for engaging book running lead managers, legal advisors and share transfer agents for the planned initial public offering (IPO). The move takes the process a step closer to the launch of the IPO, which is going to be India's biggest public issue so far. The Centre has stated its intention to see the process through, which had been delayed earlier because of the COVID-19 pandemic, in the current financial year.

In a notification released on July 15, the Department of Investment and Public Asset Management (DIPAM) said, "The potential size of the IPO is expected to be larger than any precedent in Indian markets. It is the endeavour of the government to attract investment from institutional investors both domestic and global, in addition to retail investors."

Valuation of LIC underway

Presently, the valuation of LIC is underway. Once it is done, book-running lead managers (BRLM) will help DIPAM in taking LIC public. The BRLM's main responsibilities will include preparing the draft red herring prospectus, ensuring that the IPO is carried out as per the regulator and market guidelines, conduct market surveys and roadshows, both domestic and international, act as the under-writer of the IPO and advice the government on the timing of the listing, said DIPAM in the notification.

"Bidders should have advised, handled, and completed at least one transaction of IPO the size of Rs 5,000 crore or more between April 1, 2016 and March 31, 2021, or should have completed one capital market transaction of Rs 15,000 crore or more in the same period," the RfP for BRLMs said. The last date for submission of bids is August 5 and the successful bidder will be announced on August 6. 

Backdrop

The Cabinet Committee on Economic Affairs (CCEA) had cleared disinvestment of the country's largest insurer LIC recently on July 12. Now, a panel headed by Finance Minister Nirmala Sitharaman will decide on the quantum of stake dilution. The Department of Investment and Public Asset Management (DIPAM) had in January appointed actuarial firm Milliman Advisors LLP India to assess the embedded value of LIC ahead of the IPO (Initial Public Offering).

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