LIC IPO: Govt screens 11 companies for role of transaction advisor

Presentations made on video conference to government; IPO pegged at Rs 1 trillion by some

The government has kicked off the process to launch the initial public offer (IPO) of insurance giant Life Insurance Corporation of India (LIC) — the mainstay of this financial year’s ambitious Rs 2.1-trillion disinvestment target. The Department of Investment and Public Asset Management (Dipam), the nodal agency for conducting divestments, on Friday screened 11 companies to play the pre-IPO transaction advisor’s (TA’s) role for the proposed IPO.

Citibank, CLSA, and Credit Suisse were among the foreign investment banks that applied for the role. Over half a dozen domestic firms, including Axis Capital, SBI Cards, and Edelweiss, are also in the fray. Deloitte India Touche Tohmatsu was the only non-investment bank to apply.

LIC’s IPO will be by far the biggest in the domestic capital markets. Industry players say many firms want to play the TA’s role. “LIC’s IPO will be a ‘trophy deal’ in the truest of sense. Any firm that is associated with the IPO will get bragging rights,” said an investment banker.

Experts said the selection of the TA meant that the Centre was serious about launching the IPO before the end of this financial year. Given the complexities involved, many had expressed doubts whether the Centre would be able to launch the IPO before March 31.

The proposal to list LIC was announced in the Union Budget. At the time, the Centre had not begun any preparatory work on it. “Appointing TA is a big first step. Going by the share sale trend in recent months, the market is showing strong appetite for large issuances despite the Covid-19 pandemic. It may not be impossible to launch the transaction in the next two quarters,” said an expert.

The Centre is likely to select two transaction advisors for the IPO.