LIC IPO: Govt plans to raise Rs 20,000 crore from big investors

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In the run-up to the mega IPO of the state-run Life Insurance Corporation (LIC) of India, the government is considering a proposal to allow a 15% share of LIC to large institutional investors, according to a report. The government aims to raise between Rs 15,000-20,000 crore from the institutional investors, according to a report in New Indian Express.

The numbers game

Quoting a senior Union Finance Ministry official, the report stated, “The IPO process of the LIC is on the track. One of the proposals is to allow at least 15% of the offer to large cornerstone investors, foreign portfolio investors, and institutional investors as a pre-IPO placement. The proposal is under examination.”

Market experts believe the mega IPO is estimated to be around Rs 1 lakh crore.

The pre-placement to large investors is expected to be between Rs 15,000 crore and Rs 20,000 crore, according to the report. Pre-placement is a common route, but so far, government-owned companies have not opted for this route, the report added quoting the finance ministry official.

RBI approval sought

The official also informed that the government has sought clarification whether RBI will allow industrial houses to participate in the stake sale process of IDBI Bank, as LIC’s stake in IDBI will be sold together with GoI’s shareholding.

According to an official quoted by NIE, the ministry has requested the RBI to allow industrial houses to participate in divestment.

Earlier, the government had selected 10 merchant banks including Goldman Sachs, JP Morgan, Citigroup, Nomura, Bank of America Securities, JM Financial, SBI Caps, Kotak Mahindra Capital, ICICI Securities and Axis Capital to manage the IPO of LIC.

The publication reported that Milliman Advisors LLP India has been hired to assess the embedded value of LIC, while Deloitte and SBI Caps will be pre-IPO transaction advisors.