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.
Applicants should have handled at least one IPO of at least ₹5,000 crore between 1 April 2017 and 31 March 2020 or should have managed a capital market transaction of ₹15,000 crore or more during this period.
Applications can be submitted till 13 July.
The pre-transaction advisers will advise and assist the government on the IPO’s modalities and timing, recommend the need for other intermediaries required in the IPO process, help identify and select these intermediaries, prepare all documents, structure the transaction, organize non-deal road shows, suggest measures to fetch optimum value and position the minority sale, among others.
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.
A public listing of LIC may be a protracted affair as it will require amending the LIC Act. The insurer may also need to change the way it distributes surpluses and amendments to Sections 24, 28 and 37 of the Act may be needed. Section 24 deals with the way the corporation handles its corpus, Section 28 is about dividend distribution norms and Section 37 provides government guarantee on all its policies.