The Government to Finalise Lead Managers for LIC IPO this Week

DIPAM (Department of Investment and Public Asset Management) is set to finalise the lead managers for LIC IPO. Touted to be one of the largest public offerings to date, 16 lead managers are poised to make a presentation in front of a Government-appointed committee on the 24 and 25 August 2021.

On Tuesday, i.e. 24 August 2021, global investment banks such as –

1. Citigroup Global Markets India Pvt Ltd
2. BNP Paribas
3. BofA Securities (previously DSP Merrill Lynch Ltd.)
4. HSBC Securities
5. P. Morgan India Pvt Ltd
6. Goldman Sachs (India) Securities Pvt Ltd
7. Capital Markets (India) Pvt Ltd
8. Nomura Financial Advisory and Securities (India) Pvt Ltd

Whereas, on Wednesday, i.e. 25 August 2021, domestic investment banks such as –

1. HDFC Bank Ltd
2. Kotak Mahindra Capital Company Ltd
3. DAM Capital Advisors Ltd
4. IIFL Securities Ltd
5. ICICI Securities Ltd
6. Yes Securities Ltd
7. Axis Capital Ltd
8. SBI Capital Market Ltd
9. JM Financial Ltd

These investment banks will make a virtual presentation to lead the LIC IPO.

The Union Cabinet cleared the proposal on LIC’s IPO last month. This disinvestment comes as a part of the Indian Government’s bid to raise Rs. 1.75 lakh crore in the fiscal year of 2021-22.

What are the Eligibility Criteria?

DIPAM, on 15 July 2021, announced that it would employ up to ten lead managers with ample experience in managing IPOs. Together, these book-running lead managers will help the Government to execute this public offer without any hassle. The particulars of this proposal include –

1. Interested financial institutions must have managed a minimum of one IPO of Rs. 5000 crores.
2. They should have experience in managing a minimum of 1 equity-capital market transaction.
3. Otherwise, they must have managed one qualified institutional placement or an OFS of a minimum of Rs. 15,000 crores.

Investment bankers following their shortlisting need to exhibit their proposals in front of an IMG or Inter-Ministerial Group. Their presentation must cover the criteria mentioned above. Following this presentation, IMG will evaluate these applicants and complete this selection process.

As per DIPAM, the lead managers will have the liberty to decide IPO size, its timeline and structure. They will also be in charge for any due diligence required in this process, readying documents of IPO, and finishing all regulatory formalities in accordance with insurance and market regulators.

Also, they need to complete the required paperwork with the Registrar of Companies and stock exchanges. Furthermore, lead managers will be responsible to guarantee the best possible return to the Indian Government. They can take necessary measures to create interest in this public offering.

Additionally, selected lead managers will also be responsible to underwrite this IPO, allocating shares and providing after-sales services.

Parting Thoughts

The disinvestment of LIC and a few other public sector companies aims to reduce the fiscal deficit. Even though the dates have not been finalised yet, this IPO is likely to hit bourses by the end of this fiscal year. Considering LIC’s financial stability, its reach, and its year-on-year revenue, investing in India’s largest insurance provider, will be a safe bet for investors.

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Frequently Asked Questions

1. What is the expected size of LIC IPO?

No concrete details regarding the issue size of LIC IPO are yet to be available. However, experts predict it to be over Rs. 50,000 crores.

2. Who is the register of LIC IPO?

The register of LIC IPO has not been appointed as of now.

3. Will LIC IPO have any adverse effect on its policyholders?

No, LIC IPO will not have any effects on its policyholders. They will continue to receive their services.

4. Will LIC IPO keep its sovereign guarantee?

Yes, the Indian Government has confirmed that it will keep the sovereign guarantee of LIC.