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Home >Companies >News >Goldman Sachs, Citi, 8  others  make  the  cut for LIC IPO mandate

Goldman Sachs, Citi, 8  others  make  the  cut for LIC IPO mandate

Unlike in the past when banks would quote as low as  ₹1 to bag marquee government divestment deals, in the case of the LIC IPO, a minimum fee of  ₹1 crore has been fixed for each bank in the final syndicate.Premium
Unlike in the past when banks would quote as low as 1 to bag marquee government divestment deals, in the case of the LIC IPO, a minimum fee of 1 crore has been fixed for each bank in the final syndicate.

  • The banks were scored on various parameters such as the experience of handling initial public offerings (IPOs) larger than 5,000 crore, expertise in life insurance, qualification of team members, marketing strategy, strength in drawing retail participation, and global distribution capabilities.

Mumbai: Goldman Sachs, Citigroup, JPMorgan, Kotak Mahindra Capital and SBI Capital are among 10 investment banks who will manage the mega public listing of state-run Life Insurance Corp. of India, two people aware of the development said.

Others who will handle India’s largest-ever initial public offering are Bank of America, Nomura, Axis Capital, JM Financial and ICICI Securities.

The 10 merchant banks were chosen from 16 who made presentations to an inter ministerial group on Thursday, the people cited above said, requesting anonymity.

Mint reported on 11 August that 18 investment banks are competing to manage LIC’s initial share sale. Two of these banks did not make the cut for the round of presentations.

The banks were scored on various parameters such as the experience of handling initial public offerings (IPOs) larger than 5,000 crore, expertise in life insurance, qualification of team members, marketing strategy, strength in drawing retail participation, and global distribution capabilities.

Banks also had to indicate the valuation approaches to be followed in determining the IPO price, along with an estimated value.

A mere 10% stake in LIC is estimated to be worth at least 1 trillion, which will make it one of the most valuable companies in India, Mint had reported earlier.

Unlike in the past when banks would quote as low as 1 to bag marquee government divestment deals, in the case of the LIC IPO, a minimum fee of 1 crore has been fixed for each bank in the final syndicate.

To elicit wider retail investor participation, the government has decided to bear expenses concerning the payment of brokerage fees.

The brokerage will be 0.35% on allotment to retail investors, 0.15% on allotment to non-institutional investors, and 0.25% on allotment to eligible staff or policyholders.

Processing fees for UPI and applications supported by blocked accounts will also be borne by LIC or the government, given the expectation of large retail participation.

Mint had reported in June that in the run-up to the IPO, the government plans to bring in a clutch of anchor investors to invest up to 25,000 crore in shares of LIC.

The country’s largest insurer will also restructure its board of directors and adopt new accounting norms before the IPO.

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