They said Canadian pension managers such as CPPIB, CDPQ, California University Endowment, Brookfield and the Kuwait Investment Authority are among other funds that will have meetings with this week and early next week. The 10 investment banks running the issuance connect with up to 100 of the world’s top fund managers, sovereigns, pensions and private equity funds. The stock sale is likely to value the insurance giant at around $110 billion, people familiar with the matter said.
LIC did not respond to inquiries. Individual bankers and financial institutions were not immediately available for comment.
The Ministry of Finance has not yet made a final decision on the timetable for the IPO.
The initial public offering is expected in the March quarter
The government has hired Goldman Sachs, JP Morgan, Citigroup, Nomura, Bank of America Securities, JM Financial, SBI Caps, Kotak Mahindra Capital, ICICI Securities and Axis Capital to manage the sale of the shares.
One of the people mentioned above said: “Anchor assignment negotiations are underway. We are seeing a good response and approaches have been taken with quality institutions only.”
The government is looking to offload up to 10% of its stake through an IPO as well as the initial issuance of new shares to expand the insurance company. Although the bankers have not yet given a full confirmation of the valuation, the Ministry of Finance is forecasting Rs 10-12 crore, which will lead to a mobilization of at least Rs 1 crore to the government.
The Department of Investment and Asset Management (DIPAM) expects to launch the initial public offering of LIC in the January-March quarter.
“In the IPO of LIC, we are working hard. For the capital market, it will be a very big event in the first quarter of 2022,” DIPAM Secretary Tohin Kanta Pandey said earlier this month. The IPO is crucial to achieving the government’s divestment target of Rs 1.75 crore for FY22.
Starting with an initial capital of Rs 5 crore in 1956, LIC’s asset base exceeded Rs 38 crore with total investments of Rs 36.8 crore and a life fund of Rs 34.4 crore at the end of March, it said two months ago. In the year ending March 2020, total assets were just under Rs 32 crore, total investments at Rs 30.7 crore and its Life Fund at Rs 31.1 crore.
“There is also a portion (of the IPO) that will be kept for policyholders,” Chairman MR Kumar told ET in November. “For the first time, clients will also get a portion of the shares reserved for them. There are 60 million demo accounts in the country and we have 250 million clients. So LIC’s IPO has the potential to expand the entire capital market — if three — four new customers come in. And they open demat only for the initial public offering of LIC, and it will not stop at only LIC.”
Emkay Global Head of Investment Banking, Yatin Singh, said, “LIC is a corresponding investor, and its profitability in the past two years is excellent. It would be an attractive bet with reasonable pricing.”