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Upcoming IPO: Global investors line up for anchor issue in mother of all share sales in India

LIC IPO: Global investors line up for anchor issue in India&nbsp | &nbspPhoto Credit:&nbspiStock Images

Key Highlights

  • Government has not declared timeline of LIC IPO but DIPAM secy earlier said issue will open in fourth quarter of FY21-22
  • Investment banks for LIC IPO have reached out to global funds, investors. Issue size likely to be in range of $10-12 billion
  • LIC’s valuation which is likely to be in range of $110-150 billion will decide IPO size. The IPO’s success will determine whether government can fulfill its Rs 1.75 lakh crore disinvestment target

The state-owned insurer Life Insurance Corporation (LIC) has evinced strong interest from global investors for the anchor issue of its much-awaited initial public offer.

Blackstone, BlackRock, Abu Dhabi Investment Authority, Government of Singapore Investment Corp and Capital International are believed to have held discussions with the insurance behemoth for anchor issue allocations.

Meetings are also scheduled this week and next with California University Endowment, Brookfield and Kuwait Investment Authority, Canadian Pension managers such as CPPIB and CDPQ, according to a report in Economic Times.

The investment banks appointed to lead the issue are reaching out to global funds, sovereign and pension funds and private equity funds for India’s biggest maiden issue that is likely to value LIC in the range of $110-150 billion.

Although a final timeline of the IPO has not been finalised by the government yet Department of Investment and Public Asset Management (Dipam) Secretary Tuhin Kanta Pandey earlier said it is expected sometime by the fourth quarter of the current financial year 2021-22.

The investment bankers for the issue are Goldman Sachs, JP Morgan, Citigroup, Nomura, Bank of America Securities, JM Financial, SBI Caps, Kotak Mahindra Capital, ICICI Securities and Axis Capital to manage the share sale.

The government wants to offload 10% stake in India’s biggest insurance company which holds assets to the tune of $511 billion, which is roughly the size of the country’s mutual fund industry.

The government is yet to release an official figure but it aims to seek Rs 10-12 lakh crore which will lead to a share sale of Rs 1 lakh crore for the company which is synonymous with insurance in India.

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The success of the IPO will also help bridge the government’s disinvestment target of Rs 1.75 lakh crore. So far this year, it has garnered just Rs 9,110 crore from disinvestments and will get another Rs 2,700 crore once the sale of Air India is completed

LIC was founded in 1956 by merging over 245 insurance companies and provident societies with the objective of offering insurance to all sections of society.