Action on LIC IPO: After no bids first time, govt again invites proposals from law firms
The issue is likely to hit market in the first quarter of 2022; 10 merchant bankers have already been shortlisted by government
The government has invited bids from law firms for the second time to advise it on the initial public offering of LIC. The first bids were invited on July 15 with the last date of August 6. However, the request for proposal did not receive sufficient response.
The department of investment and public asset management floated the (DIPAM) the second RFP for appointing legal firms on Thursday, who have been asked to bid in consortium with an international firm. The last date for bids is September 16.
Reputed firms
“Considering insufficient demand received in the first RFP, it has been decided to issue a fresh RFP,” DIPAM said. In the RFP, DIPAM said it requires the services of reputed law firms with experience and expertise in initial/further public offerings in capital markets to act as legal advisors and to assist the government in the process of listing of LIC.
“The domestic law firm will act as the legal adviser to the transaction and should submit proposal in consortium with an international law firm of repute, with similar experience and expertise in public offerings in capital markets,” DIPAM said.
Merchant bankers shortlisted
DIPAM had also invited bids from merchant bankers for the LIC issue on July 15, and 16 firms had put in bids. Following that, DIPAM last week shortlisted 10 merchant bankers, including Goldman Sachs Group Inc, JPMorgan Chase & Co, ICICI Securities Ltd, Kotak Mahindra Capital Co, JM Financial Ltd, Citigroup Inc and Nomura Holdings Inc, among others for managing the LIC IPO.
The LIC IPO is likely to hit the market during the first quarter of the next calendar year.
The government may also allow foreign investors to pick up stakes in the country’s largest insurer. As per Sebi rules, foreign portfolio investors (FPIs) are permitted to buy shares in a public offer.
However, since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation.
“The potential size of the IPO is expected to be far larger than any precedent in Indian markets,” DIPAM had said. The listing of LIC will be crucial for the government in meeting its disinvestment target of Rs 1.75 lakh crore for 2021-22 (April-March).
So far this fiscal, Rs 8,368 crore has been mopped up through minority stake sales in PSU and sale of SUUTI stake in Axis Bank.
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