Thinkpad: Big, Bigger, Biggest

Happy weekend.

After a year of big name initial public offerings, comes the biggest of them all — Life Insurance Corporation. The draft prospectus for the insurer's public offering hit last Sunday and since then a lot of time has been spent understanding one of the most opaque organisations in India.

A UBS report laid out the large role LIC plays in the Indian financial system.

"Nearly Rs 10 of every Rs 100 saved by an Indian household each year goes to LIC, making it larger than even the perceived staple of household savings—a deposit with State Bank of India," UBS pointed out. With $520 billion total assets under management, LIC is also the largest institutional investor in Indian markets. Alongside, it plays life saver for the government every now and then (think IDBI Bank).

The scale of the public offering is also staggering. The government’s target for LIC is 25% of last year’s total capital-raising. Daunting as it sounds, the target is not insurmountable. At least 10 companies generated demand for shares worth more than Rs 1 lakh crore in the past half-a-decade even though the size of fundraise was much smaller, BQ reported in this story.

To draw in subscriptions, LIC's large policyholder base will be tapped, there may be a special hike in UPI limits to allow for higher bids, adding to an already long list of concessions made to get the public issue off the ground.

For those who have seen LIC bail out everything from public issues to government companies and banks, you may be wondering whether the company will continue to be called in as rescuer-of-last-resort. Well, the prospectus discloses that as a risk factor. "Our Corporation may be required to take certain actions in furtherance of the GoI’s economic or policy objectives. There can be no assurance that such actions would necessarily be beneficial to our Corporation," it says.

For those wanting to understand the key financial metrics of the organisation, its investment portfolio and more, follow BQ's coverage on this page.

If this one is pulled-off successfully, it would be a second big victory after the sale of Air India in recent times.

Beyond LIC, this week saw a lot of old skeletons tumbling out.

SEBI's order on NSE, its former chief Chitra Ramkrishna, the Himalayan Yogi and what human form hides behind the transcendental, occupied much time and mind space. It should but perhaps the focus should be on why this escaped the organisation, its board and the regulator all this while. The Yogi, while it makes for a great headline and copy, may be the sideshow in a bigger story.

As we go into the weekend, reports have emerged of investigative agencies conducting searches at Ramkrishna's residence. This may not be the last we have heard of it.

Another set of old skeletons stumbled out when the CBI filed an FIR in the ABG Shipyard bad loan case — a stressed account that dates back to 2013-14 and is already under liquidation. It's been called the largest bank fraud because banks tag the entire outstanding loan as a fraud once malfeasance is detected. The diversion of funds detected was smaller. Frankly, this is garden variety fraud from those years — bank loans routed to group companies via a complex web of transfers. Bankers looked the other way till it was too late. The outrage is coming much too late.

Any jokes you want to make about the barn door and the horse are perfectly justified in both cases.

Since it was a week of crazy stories, we'll leave you with another one — a different kind of crazy though. The Felicity Ace, a massive Panama-flagged cargo ship, is ablaze and adrift in the Atlantic Ocean with thousands of luxury cars on it. The crew has been rescued, thankfully. The cars... we don't know yet if they will sink or swim.

Till next week.