The government has picked Edelweiss Financial Services Ltd and Deloitte as the two pre-initial public offer (IPO) transaction advisors for the listing of the country’s biggest insurer – Life Insurance Corporation of India (LIC), whose public offer is expected to be the largest ever in the history of the domestic capital markets, two individuals told Moneycontrol on condition of anonymity.
The scope of the mandate includes advising the Centre on the modalities of the IPO and the timing, arriving at an optimal capital structure, preparing restated consolidated financial statements for the past three years for LIC and its subsidiaries, structuring the transaction amongst other aspects.
Edelweiss Financial Services and Deloitte were unavailable for immediate comment.
On June 19, 2020, the Department of Investment and Public Asset Management (Dipam) under the Finance Ministry has issued a request for proposal (RFP), seeking to engage pre-transaction advisors for partial disinvestment of the government’s equity shareholding in LIC through an IPO.
The notification said that it proposed to engage up to two pre-IPO transaction advisors from “reputed professional consulting firms/ investment bankers/ merchant bankers/ financial institutions/ banks, independently (not in consortium) for facilitating or assisting DIPAM in the preparatory processes leading to the IPO of LIC India.”
It added that to qualify as an advisor for the pre-IPO deal, the bidder should have an experience of handling at least one IPO of a minimum size of Rs 5,000 crore between April 1, 2017, and March 31, 2020, or should have managed a capital market transaction of Rs 15,000 crore or more during this period.” According to the request for proposal, the government has 95 percent stake in LIC.
In the Union Budget speech for 2020-21, Finance Minister Nirmala Sitharaman had said, "Listing of companies on stock exchanges disciplines the company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO)."