India Asks Banks to Pitch for Roles on Top Insurer’s Mega IPO

(Bloomberg) -- India asked banks to pitch for roles managing the initial public offering of the country’s largest insurer, Life Insurance Corp. of India, a key step forward in what’s set be the nation’s biggest listing.

The government is seeking proposals by Aug. 5 to act as lead managers; registrar and share transfer agents on the mega IPO, according to a notice issued by the divestment department on Thursday. It also invited bids from advertising agencies and legal advisers by Aug. 6.

The sale will include part of the government’s stake in the insurer, as well as new shares, the disinvestment department said, adding that the size of the offering is expected to be “far larger than any precedent in Indian markets.”

Prime Minister Narendra Modi’s government is pushing ahead with LIC’s IPO to help plug a widening budget gap. The administration plans to raise $24 billion by selling assets including Air India Ltd. and Bharat Petroleum Corp. as it attempts to revive an economy battered by the coronavirus pandemic.

Biggest Listing

The listing, which is slated for March 2022, could value LIC at as much as $261 billion, based on its assets under management and using private sector insurers as a benchmark, analysts at Jefferies India led by Prakhar Sharma wrote in a February note. That would make it bigger than Reliance Industries Ltd., which is currently India’s largest listed company with a market value of about $183 billion.

The government, which owns 100% in LIC, this month formally approved the IPO. It will next determine the embedded value of the company to determine the stake sale details, including the amount and price band.

LIC had total assets of 32 trillion rupees ($429 billion) in the financial year 2019-2020, according to its latest annual report. The insurer had an almost 69% market share in life insurance in terms of total first year premiums.

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