Investment banks Citigroup, Edelweiss, SBI Capital Markets, Credit Suisse and Deloitte are in the running for the role of pre-IPO advisor to Life Insurance Corp of India, for what is likely to be the biggest IPO in the Indian markets.
These banks were shortlisted on Monday after a round of technical bids and will now move on to financial bids, which will open on Tuesday morning, said a person aware of the development. These five firms have been shortlisted out of 11 that had shown interest.
“These firms were shortlisted based on past experience in insurance IPOs and their investor reach, among other criteria,” he said.
Post the financial bids, two of these firms will finally be mandated for the pre-IPO work, the person added.
“The scope of work of these two advisors will be to prepare LIC to go for a public listing, including advising the government on various aspects. This will include advising on valuation and structuring of the deal,” a second person said, speaking on the condition of anonymity.
Mint reported on 19 June that the Department of Investment and Public Asset Management (Dipam) under the finance ministry issued the request for proposal (RFP) seeking to engage as many as two pre-transaction advisers for partial disinvestment of the government’s LIC stake through an IPO. The advisers will assist the government with legal inputs on the amendments needed to the LIC Act, especially with regard to the corporation’s future capital structure. The government needs to amend the LIC Act first.
There are 24 life insurers, with LIC commanding a market share of 69% in FY20. During the fiscal, it collected a total first-year premium of ₹1.78 trillion—25.17% higher than the previous year’s ₹1.42 trillion, according to the Insurance Regulatory and Development Authority of India.
LIC, in which the government holds a 95% stake, has assets worth ₹34 trillion.
Spokespersons for Citi, Credit Suisse, Edelweiss, SBI Capital and Deloitte could not be immediately reached for a comment.
The article was first published on livemint.com.