lic: Indian legislation companies reluctant to advise on IPO of insurance coverage large LIC: Sources – Occasions of India

MUMBAI: India’s plans to checklist state-run Life Insurance coverage Company (LIC) face an uncommon drawback: home legislation companies are shying away from advising the federal government, deterred by the low charges on provide on the time of a profitable increase in company inventory listings.
With tens of millions of policyholders and a share of 66% of recent premium collections in a crowded insurance coverage market, LIC is a family title, managing belongings of greater than $450 billion.
The federal government is scrambling to checklist the insurance coverage behemoth by March, in an train set to be India’s largest IPO, at a possible $12 billion. As many as 16 world and home funding banks just lately bid to deal with it.
However prime legislation companies that may usually be eager on such big-ticket IPOs to spice up their credibility in authorities circles are hesitant to advise New Delhi, as their groups are stretched by the company IPO increase, 5 legislation agency companions advised Reuters.
“Most large legislation companies in India are overburdened with IPO work,” mentioned Nitin Potdar, an M&A companion at prime Indian legislation agency J. Sagar Associates. “And the LIC IPO would want actual large groups of skilled attorneys.”
LIC’s large dimension and sophisticated enterprise construction and merchandise make it a “nightmare” for attorneys to draft the prospectus, he added.
The unappealing charges are one other dampener, mentioned legislation agency companions, who spoke on situation of anonymity to keep away from authorities reprisals.
The finance ministry, which is dealing with the IPO course of, didn’t instantly reply to requests for remark.
Thursday is the deadline for the legislation companies to submit bids.
Refinitiv information reveals India has about $6 billion price of IPOs within the pipeline.
After food-delivery large Zomato’s $1.2 billion IPO in July, digital funds agency Paytm and ride-hailing large Ola are eyeing market debuts, holding attorneys busy and their money registers ringing.
In an embarrassing episode, the federal government has twice revised its provide to draw legislation companies for the LIC IPO.
In early September, after an preliminary lacklustre response, New Delhi restricted the timeline of the companies’ IPO work to 3 years.
Main companies, comparable to Cyril Amarchand Mangaldas, Shardul Amarchand Mangaldas and Khaitan & Co, would sometimes be eager on a authorities IPO of this dimension, however didn’t bid within the first tender, sources conscious of the matter mentioned.
The three companies didn’t reply to queries from Reuters.
Authorities officers additionally just lately known as a couple of prime legislation companies and nudged them to affix in IPO work, mentioned three legislation agency companions acquainted with the discussions.
This week, the federal government eased its charge fee timetables, to supply 50% fee after the draft IPO prospectus is filed.
However the IPO work on LIC is expansive and sophisticated, the legislation agency companions mentioned, which makes them even much less eager.
Legislation companies should deal with 36 duties on the federal government’s to-do checklist for LIC, from drafting the IPO papers, and fielding regulators’ queries to reviewing company governance and pending litigation, and analysing dangers.
The quantity of labor wanted could be as a lot as for 5 non-public IPO offers, and nonetheless “it will not be remunerative,” mentioned one prime companion in an Indian legislation agency.

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