Eleven global firms have offered to act as ”transaction advisers” to the government for the initial public offer of Life Insurance Corporation.
The 11 entities are Axis Capital, Citigroup Global Markets, CLSA, Credit Suisse Securities, Deloitte India, Edelweiss Financial Services, IDFC Securities, IIFL Securities, JM Financial, SBI Capital Markets and Yes Securities.
LIC’s IPO is expected to be by far the biggest in the domestic capital markets. Some have pegged the issue size at about Rs 1 lakh crore. The insurance behemoth’s IPO is critical to achieve the ambitious divestment target of Rs 2.1 lakh crore in this financial year.
“The adviser would ensure preparatory aspects of the proposed IPO and would advise and assist the government on modalities of the IPO and the timing; structuring the transaction; organising roadshows, suggesting measures to fetch optimum value and positioning of the minority sale, among others,” the government has said in the request-for-proposal.
The government proposes to engage up to two pre-IPO transaction advisers to assist the department of investment and public asset management.
It is likely that the government would sell an 8-10 per cent stake in LIC through the listing process. The valuation of LIC is estimated by analysts to be somewhere between Rs 9.9 lakh crore and Rs 11.5 lakh crore.
The valuation has been concluded on the basis of market capitalisation as a percentage of the asset under management (AUM).
LIC’s AUM stood at Rs 33.2 lakh crore as of December 2019. An 8 per cent stake sale by the government could mean an IPO worth Rs 80,000-90,000 crore.
LIC’s total investments in debt and equity exceed Rs 25 lakh crore. The task for the bankers would be to scrutinise the details of these investments while arriving at a valuation. Further, the real estate assets of LIC will be part of the valuation process.