LIC IPO - Government appoints Investment bankers

The government has taken an important step towards the LIC IPO. On 08 September, the DIPAM secretary, Tuhin Pandey, announced the list of investment bankers managing the LIC IPO. A total of 16 merchant bankers had made presentations on 15-July to the government for managing the LIC IPO and out of them 10 have been shortlisted for the job. The government is yet to announce specifics of BRLMs and advisors to the issue.

The Department of Investment and Public Asset management (DIPAM) has appointed 5 global investment banks and 5 Indian investment banks.

The 5 global investment banks include

     1. Goldman Sachs

     2.Citigroup

     3. JP Morgan

     4. BOFA Securities

     5. Nomura

The 5 Indian investment bankers to the issue include:

   1.  SBI Caps

   2.  JM Financial

   3.  Axis Capital

   4.  ICICI Securities

   5.  Kotak Mahindra Capital.

Apart from appointing the investment bankers, DIPAM has invited applications for appointment of legal advisors to the issue. KFintech Private Limited , formerly Karvy Computershare, has been appointed as the registrar to the issue. Milliman Advisors LLP is already acting as the actuarial advisors and they are in the process of arriving at the embedded value of LIC. The issue is slated in the Mar-22 quarter.

While FDI up to 74% in life insurance is permitted under the automatic route, that is not applicable to LIC as it is governed by the LIC Act. The IPO is also likely to permit foreign investors to invest up to 20% via the IPO route. The Cabinet Committee on Economic Affairs has already cleared the issue.

Read: New rules for Insurance Sector

The success of the LIC IPO is crucial to the success of the government’s Rs.175,000 crore disinvestment target in FY22. Till date, divestments have only collected Rs.8,368 crore this fiscal. The government may sell 5% to 10% in LIC and the size of the IPO could vary from Rs.75,000 crore to Rs.100,000 crore and will be the biggest in Indian IPO history.

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