India may let foreign investors buy up to 20% in LIC IPO

New Delhi: The Indian government is considering allowing foreign institutional investors to buy up to a total of 20% in state-owned Life Insurance Corporation (LIC), a government source said, as it presses ahead with a stake sale, reports Reuters.

The listing of LIC is set to be India’s biggest ever initial public offering (IPO), with the government aiming to raise up to Rs 900 billion ($12.2 billion) from its stake sale.

At present, even though foreign institutional investors are allowed to hold up to 74% of private insurance companies and up to 20% of state-owned banks, they are not permitted to own shares in LIC, according to Reuters.

Enabling this would allow foreign pension funds, insurance companies and mutual funds to participate in the IPO of India’s largest life insurer.

The government is keen to complete the listing this financial year to help with budgetary constraints and late last month selected 10 merchant banks out of the 16 that had bid to kick-start the process.

In total, the merchant banks will earn a fee of around Rs 100 million ($1.36 million), higher than the token fee charged on some IPOs of state-owned firms in the past, but still significantly lower than fees for private listings.

Meanwhile, the Indian government has finalized the Book Running Lead Managers (BRLM) for the much awaited initial public offering (IPO) of Life Insurance Corporation of India (LIC).

The selected BRLM include Kotak Mahindra Capital Company Ltd, Goldman Sachs Securities, ICICI Securities, and JM Financial.

The others are Citigroup Global Markets India, Nomura Financial Advisory and Securities (India), Axis Capital, DSP Merrill Lynch, and SBI Capital Market.

“Government has finalized the Book Running Lead Managers and some other advisors for the IPO of LIC,” said the Twitter handle of the Secretary, Department of Investment and Public Asset Management (DIPAM).

Further, the government has selected KFintech Ltd as the registrar & share transfer agent for the proposed IPO.

As per the amendments proposed under the Finance Bill 2021, the authorised share capital of LIC shall be Rs 25,000 crore, divided into 2,500 crore shares of Rs 10 each.

Capital market regulator SEBI has also eased the minimum public offer norms in a bid to pave the way for the LIC IPO.

The government expects to bring the IPO around Diwali this year.

Image courtesy of (File photo)

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