DIPAM invites bids from transaction advisors for LIC IPO

Department of public asset management (DIPAM) has invited bids from consulting firms, investment bankers and financial institutions to advise the government on the preparatory processes of the proposed initial public offer (IPO) of Life Insurance Corporation of India (LIC).

LIC’s public offer is expected to be the largest ever in India, for which the government will engage two pre-IPO transaction advisors, even as most fo the government’s divestment plans – including Air India, BPCL, Concor - have been put on the back burner due to Covid 19 pandemic.

The last date for bids has been kept at July 13, as per request for proposal (RFP) issued Friday. The bids would be opened on July 14.

The government "proposes to engage up to two pre-IPO Transaction Advisor(s) from reputed professional consulting firms/ investment bankers/ merchant bankers/ financial institutions/ banks, independently (not in the consortium) for facilitating/assisting DIPAM in the preparatory processes leading to the IPO of LICI,” the government said in the RFP.

The advisor would ensure preparatory aspects of the proposed IPO and would, advise and assist the government on modalities of IPO, the timing, structuring the transaction, organizing non-deal roadshows, suggesting measures to fetch optimum value and positioning of the minority sale among other aspects.

The government has set the experience criteria for advisors including handling of transactions or IPO of more than Rs 5,000 crore during last three years. Bidders must have three years of experience for providing advisory services for IPO or strategic disinvestment or strategic sale or M&A activities or private equity investment transactions.

"Bidders should have advised, handled, and completed at least one transaction of IPO of a size of Rs 5,000 crore or more between April 1, 2017 to March 31, 2020 or should have managed a capital market transaction of Rs 15,000 crore or more during the period,” the RFP said.

The government is looking at listing the country's largest life insurer on domestic bourses in the January-March quarter of current fiscal. The IPO of LIC would contribute a huge chunk to the government's budgeted disinvestment target of Rs 2.10 lakh crore this fiscal.

In the 2020-21 Budget, Finance Minister Nirmala Sitharaman had announced to sell a part of the government's holding in LIC by way of public listing. LIC is fully owned by the government.

"Listing of companies on stock exchanges disciplines the company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created," she had said.