Merging company

Upcoming IPO: Global Investors Prepare for Anchor Issue to Sell Parent Shares of All Shares in India


LIC IPO: Global Investors Line Up For Anchor Issue In India | Photo credit: iStock images

Highlights

  • The government has not announced the timing of LIC’s IPO, but DIPAM secy said earlier that the issue will open in the fourth quarter of fiscal year 21-22.
  • Investment banks for LIC’s IPO have contacted global funds, investors. Issue size expected to be in the range of $ 10-12 billion
  • LIC’s valuation, which is expected to be between $ 110 billion and $ 150 billion, will decide the size of the IPO. The success of the IPO will determine whether the government can meet its divestment target of Rs 1.75 lakh crore

State insurer Life Insurance Corporation (LIC) has shown strong interest from global investors in the flagship issue of its highly anticipated initial public offering.

Blackstone, BlackRock, Abu Dhabi Investment Authority, Government of Singapore Investment Corp and Capital International have reportedly been in talks with the insurance giant over flagship emissions allocations.

Meetings are also scheduled this week and next with the California University Endowment, Brookfield and Kuwait Investment Authority, managers of Canadian pension plans such as CPPIB and CDPQ, according to a report in Economic Times.

Investment banks named to lead issue are targeting global funds, sovereign wealth funds, pension funds and private equity funds for India’s largest issue which is likely to rate LIC in a range of $ 110 billion to $ 150 billion.

Although a final schedule for the IPO has yet to be finalized by the government, Department of Investment and Public Asset Management (Dipam) Secretary Tuhin Kanta Pandey said earlier that it was expected by the fourth quarter of the current fiscal year 2021-2022.

The investment bankers for the issue are 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 sale of the shares.

The government wants to divest a 10% stake in India’s largest insurance company, which has assets of $ 511 billion, roughly the size of the country’s mutual fund industry.

The government has yet to release an official figure, but it aims to research Rs 10-12 lakh crore which will lead to a stock sale of Rs 1 lakh crore for the company which is synonymous with insurance in India.

The success of the IPO will also help meet the government’s divestment target of Rs 1.75 lakh crore. So far this year, it has only reaped Rs 9,110 crore from divestments and will get an additional Rs 2,700 crore once Air India’s sale is completed.

LIC was founded in 1956 by the merger of more than 245 insurance companies and provident societies with the aim of providing insurance to all segments of society.