Govt selects 10 banks to manage LIC IPO to raise up to Rs 90,000 cr: Report

The Centre has put the initial public offering (IPO) of the country’s biggest insurer Life Insurance Corporation of India (LIC) on a fast track while the privatisation of two state banks is mired in procedural issues, two government and one industry source said. It has selected 10 investments banks to manage the listing.

The listing of LIC is set to be India’s biggest ever IPO, with the government aiming to raise Rs 80,000-90,000 crore from its stake sale. In all, the government plans to raise Rs 1.75 trillion from its privatisation programme in the current fiscal year ending in March, one of the sources said.

The 10 investment banks selected are Goldman Sachs, Citigroup, SBI Capital Market, JM Financial, Axis Capital, Nomura, BofA Securities, JP Morgan India, ICICI Securities, and Kotak Mahindra Capital, said the source, who declined to be identified as he was not authorised to speak to the media. Sixteen banks including seven global banks and nine domestic banks had been in the race.

“The potential size of the IPO is expected to be far larger than any precedent in Indian markets,” one of the sources said, adding the LIC IPO has been put on a fast track as it could help partly meet budgetary spending plans.

The government plans to spend Rs 34.83 trillion, including capital spending of Rs 5.54 trillion in the current financial year.

A ministerial panel, called the Alternative Mechanism on strategic Divestment, is expected to decide soon on the size of the stake to be sold. It could be around 10 per cent, sold in two tranches, the two government sources said.

JP Morgan, Citigroup, BofA and Goldman Sachs declined to comment, while Nomura, JM Finance, Axis, Kotak and others were not immediately available for a comment.

A finance ministry spokesman was not immediately available for comment.

The roadshows would be held in the coming months in all major global financial centres to attract investors and the government would make all efforts to attract retail investors and employees to invest in the company, one of the sources said.

LIC, with assets of over Rs 34 trillion ($461.4 billion), has a subsidiary in Singapore and joint ventures in Bahrain, Kenya, Sri Lanka, Nepal, Saudi Arabia and Bangladesh.

Bank privatisation

The government had previously announced plans to sell at least two state-run banks in the current fiscal, as part of its privatisation plans and to consolidate state banks, but has not named the banks.

Plans to privatise the proposed two banks were going slowly, due to various procedural issues as well as internal assessments indicating limited appetite among investors to buy at the desired value, said one of the sources, a senior government official with direct knowledge of the matter.

“There have been discussions on the sale of banks but thinking now has shifted to first look at monetising other assets and then come to banks after that,” the source said.