The Government on Wednesday announced appointment of merchant bankers, share transfer agent and advertisement agency for initial public offer (IPO) of Life Insurance Corporation of India (LICI).

The Government plans to sell part of its stake in the nation’s largest insurer during January-March quarter of current fiscal. Though, the issue size is not known, the Government has repeatedly indicated the potential size of the IPO is expected to be larger than any precedent in Indian markets. Coal India is the largest public issue in India so far.

The PSU major had raised ₹15,200 crore in 2010. According to Department of Investment and Public Asset Management, merchant bankers or book running lead managers for the issue will include Kotak Mahindra Capital, Goldman Sachs (India) Securities, JP Morgan India Private Ltd, ICICI Securities, JM Financial, Citigroup Global Markets India Private Ltd, Nomura Financial Advisory and Securities (India) Private Ltd, Axis Capital, BofA Securities and SBI Capital Market Ltd.

Also read: LIC Mutual files papers for Balanced Advantage NFO

Hyderabad-based KFintech Ltd will be Registrar and Share Transfer Agent (RTA) while Concept Communication will be advertising agency for the share sale.

Embedded Value

Earlier, Cabinet Committee on Economic Affairs (CCEA) gave ‘in-principal approval’ to LIC IPO. The Government has already notified all amendments in LIC Act 1956 to facilitate IPO. Prior to that based on decisions by SEBI, the Finance Ministry notified relaxed norms for large companies planning to enter stock market.

On December 31, the Government appointed Milliman Advisors LLP India as the Reporting Actuary for the Embedded Value of LIC. The EV is a measure of the consolidated value of shareholders’ interest in the life insurance business within the meaning of the Insurance Act, 1938, and applicable IRDAI regulations. It is one of the pre-conditions for LIC public issue, and it needs to be determined by an independent actuary.

Divestment target

IPO of LIC is critical at a time when Government needs more and more resources during the fiscal as higher expenditure is required due to pandemic. Though tax collection, as on date, is better, there is still uncertainty which could affect collection.

The Government has set a target of ₹1.75 lakh crore to be raised through disinvestment, out of which proceeds from selling Government’s stake in public sector banks and financial institutions has been pegged at ₹1 lakh crore. As on date, the realisation through disinvestment is less than ₹10,000 crore.

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