The Finance Ministry has invited bids from consulting firms, investment bankers and other financial institutions to advise it on Life Insurance Corporation's proposed initial public offer (IPO). As per the plan, the government will engage two pre-IPO transaction advisers for what could be the largest ever IPO in India. LIC is a fully-owned government entity, which has delivered strong performance over the years.
The last date for submitting bids is July 13. The government "proposes to engage up to two pre-IPO Transaction Adviser(s) from reputed professional consulting firms/ investment bankers/ merchant bankers/ financial institutions/ banks, independently (not in the consortium) for facilitating/assisting DIPAM in the preparatory processes leading to the IPO of LICI," the government said in the request for proposal (RPF).
The job of the selected adviser will be to ensure preparatory aspects of the proposed IPO. The adviser will work on "modalities, timing, structuring of the transaction, non-deal roadshows, suggesting measures to fetch optimum value and positioning of minority sale, among other aspects".
The candidate companies must have experience of handling of IPO worth more than Rs 5,000 crore in the past three years. "Bidders should have advised, handled, and completed at least one transaction of IPO of a size of Rs 5,000 crore or more between April 1, 2017, to March 31, 2020, or should have managed a capital market transaction of Rs 15,000 crore or more during the period," the RFP said.
Notably, the Centre aims to list LIC on the domestic bourses in the January-March quarter of the current financial year. However, most of the government's divestment plans, including Air India, BPCL, etc, have been put on the back foot due to the coronavirus pandemic. With the IPO of LIC, the Centre aims to achieve around Rs 2.10 lakh of its budgeted disinvestment target.
Union Finance Minister Nirmala Sitharaman, during her Budget 2020-21 speech had said that the government proposed to sell a part of its holding in LIC by way of Initial Public Offer (IPO). "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," she had said.