Anchor investor talks for mega LIC IPO to begin next week: Report

Anchor investor talks for mega LIC IPO to begin next week: Report

Bankers will begin reaching out to potential anchor investors in Life Insurance Corporation of India’s initial public offering next week, as they seek to ensure there is enough demand for the country’s biggest share sale.

A list with the names of around 100 global investors has been shared with 10 banks working on the deal and the entities will be contacting various groups of investors, according to people with knowledge of the matter, who asked the names as discussed. Told not to take, they are private.

People said banks plan to file a draft IPO prospectus with the market regulator by the first week of December.

An LIC representative did not immediately respond to an email seeking comment.

Prime Minister Narendra Modi is going ahead with LIC's IPO - which could raise between Rs 40,000 crore ($5.4 billion) and Rs 1 trillion - to help bridge the widening budget gap.  India is seeking a valuation of Rs 8 lakh crore to Rs 10 lakh crore and may sell 5 to 10 per cent stake in the company as part of a broader disinvestment target. 

The government may also allow foreign direct investment in LIC to ensure diversified and strong demand from various sectors of investors.

Consultation with potential investors will be an important step in moving the sale forward.  Still, progress has been slow with the calculation of the embedded value of LIC taking almost eight months so far.  Embedded value is the key financial gauge for insurers that links the present value of future profits with the net value of assets.

Finance Minister Nirmala Sitharaman had said last month that the government was pushing for an IPO by March and that any delay would not be due to lack of political will.

The government selected 10 banks including Kotak Mahindra Bank Ltd., Goldman Sachs Group Inc., JP Morgan Chase & Company and ICICI Securities Ltd. to arrange the sale.

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