lic IPO: LIC IPO: Sovereign courting center, pension funds

India has canvassed Abu Dhabi Investment Authority, Singapore-based GIC, three Canadian pension funds and Qatar Investment Authority, among other sovereign wealth funds and pension funds, as lead investors in India’s Life Insurance Corporation (LIC). India’s initial public offering (IPO).

The funds had expressed interest and the government wants to confirm their participation, officials involved in the bid said. ET had announced earlier this week that the IPO would likely take place towards the end of this month.

“Many leading sovereign wealth funds have expressed interest in LIC’s IPO. Investment bankers are in advanced discussions with them to be key investors in the issuance,” one of the officials said. to ET. The government is keen on their participation because these funds are stable investors with a long-term horizon, the person said. The government had approached about 180 potential anchor investors during roadshows. Officials estimate that at least 8-10 major foreign investors will be needed as lead investors for the IPO, which is expected to be India’s biggest ever public offering.

In December last year, the Securities and Exchange Board of India (Sebi) extended the lock-up period for benchmark investors to 90 days from 30 days earlier. The market regulator has also removed restrictions on the maximum number of benchmark investors for public issues above 250 crore. At an estimated intrinsic value of Rs 5.4 lakh crore, the Center can raise Rs 60,000 to 70,000 crore through the sale of the 5% stake in LIC. The anchor investment part is expected to be around Rs 18,000 crore.

According to the Draft Red Herring Prospectus (DRHP) filed with Sebi, the insurer will allocate 60% of the Qualified Institutional Buyers (QIB) share to anchor investors on a discretionary basis. Strong anchor investments provide confidence to retail and other institutional investors, helping to generate demand for an IPO when it opens to the general public.

The official said that while talks continued, there was still no firm commitment on how much investment they were likely to make. “That will happen when we focus on the final issue price and when it is communicated to them.

The process is underway and we will do it soon,” the official said, without giving a timeline. A key consideration is the listing price and market capitalization at this level. MSCI index tough, the official said. The government has budgeted Rs 65,000 crore for divestment in the current financial year.