In 2020-2021 budget Finance Minister, Nirmala Sitharaman had stated that the government was planning to sell some proportion of the LIC holdings by public listing. LIC is entirely held by the government.
The government’s allocated disinvestment target is 2.10 lakh crore for this fiscal year, LIC IPO will contribute a huge portion in the same.
What is an IPO?
IPO stands for Initial Public Offering, it is a process of offering shares to the public which then permits a Company or Organisation to raise the funds by letting them invest.
IPO for LIC has been launched…
More than 245 Insurance Companies and provident societies merged to establish LIC.
The Central government initiated the process of partial disinvestment on June 19 of the stake in LIC along with the Financial Ministry. The DIPAM (Department of Investment and Public Asset Management) called for bids from financial institutions, consulting firms, and investment brokers. The bids were called for advising the government in the IPO preparatory process.
It is the largest IPO ever in the country and the government is undertaking 2 pre-IPO transactions advisors.
The last date for submitting bids had been extended from July 13 to July 24. The criteria for advisors has been set to the following:
- Advisors must have handled IPOs of Rs. 5,000 crore or more in the last 3 years.
- Advisors must have experience of 3 years or more for providing advisory services related to IPO, strategic sale, M&A activities, strategic disinvestment, or private equity investment transactions.
What is LIC expecting from advisors?
The advisors are supposed to take care of the preparatory aspects of the laid down IPO and also guide and assist the whole process such as organizing, scheduling, proposing, and other related angles.
The race for Transaction Advisor for IPO
On Friday, DIPAM screened 11 companies for the pre-IPO transaction advisor. Almost 12 brokerage houses and financial institutions have been in the race at present.
As per government officials, the consulting firms that have presented the bids are Citigroup Global Markets, Deloitte India, IDFC, IIFL Securities, Securities Axis Capital, CLSA, Edelweiss Financial Services, YES Securities, JM Financial, Credit Suisse Securities and SBI Capital Markets.
The only non-investment bank to apply is Deloitte India Touche Tohmatsu. The three foreign banks that have presented their bids are CLSA, Credit Suisse, and Citibank.