DIPAM invites bids from bankers, advisors for LIC's initial public offering

Kick-starting the process for LIC disinvestment, the government has invited bids from merchant bankers and legal advisors for advising it on the proposed mega initial public offering.

Inviting bids from merchant bankers, the DIPAM said the potential size of the IPO is expected to be far larger than any precedent in Indian markets.

"In order to achieve a successful IPO, it is the endeavour of the GoI to attract investment from institutional investors, both domestic and global, in addition to the retail investors," it said.

The Department of Investment and Public Asset Management (DIPAM) would appoint up to 10 merchant bankers and one legal firm for assisting and advising on the stake sale.

The last date for putting in bids by merchant bankers is August 5 and law firm is August 6.

Inviting bids from merchant bankers, the DIPAM said the listing of shares of the Life Insurance Corporation of India (LICI) on stock exchanges would entail part-sale of the government's stake in the insurer and to raise fresh equity share capital for LIC, through a IPO.

"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 LICI.... A part of the public offering may be reserved for employees and policyholders of LICI," DIPAM said.

Proposals are invited from Sebi-registered merchant bankers registered having a valid certificate; either singly or as a consortium, with experience and expertise in public offerings in capital market; to act as book running lead managers and to assist and advise the government in the process, it added.

The merchant banker would be required to undertake due diligence activities and prepare the DRHP/RHP/prospectus, organise road shows both domestic and international market and advise the government on the timing and the modalities of the IPO.

The DIPAM has also invited bids from registrar and share transfer agents and advertising agency for the IPO.

Last week, the Union Cabinet approved an IPO of LIC and the modalities such as issue size, pricing and timing would be decided by a panel headed by Finance Minister Nirmala Sitharaman.

Actuarial firm Milliman Advisors LLP India was in January appointed to assess the embedded value of LIC ahead of the IPO, which is touted to be the biggest public issue in Indian corporate history. The government expects to being the LIC initial offering by the end of current fiscal.

Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors.

The listing of LIC will be crucial for the government to meet its disinvestment target.

The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sales and privatisation.

Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling the government's stakes in public sector banks and financial institutions.

The remaining Rs 75,000 crore would come as CPSE disinvestment receipts.

So far, in the current fiscal, the government has mopped up over Rs 7,646 crore from sale of SUUTI stake in Axis Bank and OFS of NMDC.