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Indian law firms reluctant to advise on IPO of insurance giant LIC: Sources

India’s plans to checklist state-run Life Insurance Corporation (LIC) face an uncommon downside: home legislation corporations are shying away from advising the federal government, deterred by the low charges on supply on the time of a profitable increase in company inventory listings.

With thousands and thousands of policyholders and a share of 66% of latest premium collections in a crowded insurance coverage market, LIC is a family identify, managing property 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 greatest IPO, at a possible $12 billion. As many as 16 international and home funding banks just lately bid to deal with it.

However high legislation corporations that might 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 informed Reuters.

“Most massive legislation corporations in India are overburdened with IPO work,” stated Nitin Potdar, an M&A associate at high Indian legislation agency J. Sagar Associates. “And the LIC IPO would want actual massive groups of skilled legal professionals.”

LIC’s huge measurement and complicated enterprise construction and merchandise make it a “nightmare” for legal professionals to draft the prospectus, he added.

The unappealing charges are one other dampener, stated 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 corporations to submit bids.

Refinitiv information exhibits India has about $6 billion price of IPOs within the pipeline.

After food-delivery big Zomato’s $1.2 billion IPO in July, digital funds agency Paytm and ride-hailing big Ola are eyeing market debuts, preserving legal professionals busy and their money registers ringing.

In an embarrassing episode, the federal government has twice revised its supply to draw legislation corporations for the LIC IPO.

In early September, after an preliminary lacklustre response, New Delhi restricted the timeline of the corporations’ IPO work to 3 years.

Main corporations, akin to Cyril Amarchand Mangaldas, Shardul Amarchand Mangaldas and Khaitan & Co, would sometimes be eager on a authorities IPO of this measurement, however didn’t bid within the first tender, sources conscious of the matter stated.

The three corporations didn’t reply to queries from Reuters.

Authorities officers additionally just lately known as a number of high legislation corporations and nudged them to affix in IPO work, stated three legislation agency companions conversant in the discussions.

This week, the federal government eased its payment cost timetables, to supply 50% cost after the draft IPO prospectus is filed.

However the IPO work on LIC is expansive and complicated, the legislation agency companions stated, which makes them even much less eager.

Regulation corporations should sort out 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 can be as a lot as for 5 personal IPO offers, and nonetheless “it will not be remunerative,” stated one high associate in an Indian legislation agency.

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