LIC IPO | Government issues tenders for transaction advisors

Kicking off a crucial stage of the process of taking Life Insurance Corporation of India public, the centre, on July 15, issued requests for proposal (RFPs) to hire book running lead managers, legal advisors and share transfer agents for the planned initial public offering.

These RFPs take the process a step closer to the IPO of the public sector insurance behemoth, which could be India's biggest public issue, with officials expressing confidence that the deal can be done this financial year itself.

Currently, the valuation of LIC is underway. Once it is done, the book-running lead managers (BRLM) will help the Department of Investment and Public Asset Management in taking LIC public.

The BRLM's main responsibilities will include preparing the draft red herring prospectus, ensuring that the IPO is carried out as per the regulator and market guidelines, conduct market surveys and roadshows, both domestic and international, act as the under-writer of the IPO and advice the government on the timing of the listing.

"Bidders should have advised, handled, and completed at least one transaction of IPO the size of Rs 5,000 crore or more between April 1, 2016 and March 31, 2021, or should have completed one capital market transaction of Rs 15,000 crore or more in the same period," the RFP for BRLMs said.

The last date of submission of the bids is August 5, while the successful bidders will be announced on August 6. The same deadlines are in place for share transfer agents and legal advisors. The centre is also hiring an advertising agency to give publicity to the transaction.

"The potential size of the IPO is expected to be larger than any precedent in Indian markets. It is the endeavour of the government to attract investment from institutional investors both domestic and global, in addition to retail investors," DIPAM said in the RFP for share transfer agents. The share transfer agents will help the BRLMs in carrying out the transaction, while the legal advisors will deal with matters relating to the law of the land.

The Cabinet Committee of Economic Affairs (CCEA) had cleared the disinvestment of Life Insurance Corporation of India (LIC) on July 12. While the initial public offering (IPO) is expected to come in in Q4FY22, LIC has begun the process of sprucing up its books ahead of the listing.

DIPAM had in January appointed actuarial firm Milliman Advisors LLP India to assess the embedded value of LIC ahead of its proposed listing.

The valuation process of the insurers will take into multiple factors like business in the books (new business and renewals), assets and equity shareholding in other companies. The valuation could be revealed by the December quarter (Q3FY22).

The LIC IPO is expected to earn the exchequer a substantial chunk of the 2021-22 divestment target of Rs 1.75 lakh crore.