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lic: Indian law firms reluctant to advise on IPO of insurance giant LIC: Sources – Times of India


MUMBAI: India’s plans to record state-run Life Insurance Corporation (LIC) face an uncommon downside: home regulation corporations are shying away from advising the federal government, deterred by the low charges on supply on the time of a profitable growth in company inventory listings.
With hundreds of thousands of policyholders and a share of 66% of latest 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 record 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 international and home funding banks lately bid to deal with it.
However high regulation corporations that will 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 growth, 5 regulation agency companions advised Reuters.
“Most massive regulation corporations in India are overburdened with IPO work,” mentioned Nitin Potdar, an M&A companion at high Indian regulation agency J. Sagar Associates. “And the LIC IPO would want actual massive groups of skilled attorneys.”
LIC’s huge measurement and complicated enterprise construction and merchandise make it a “nightmare” for attorneys to draft the prospectus, he added.
The unappealing charges are one other dampener, mentioned regulation 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 regulation corporations to submit bids.
Refinitiv information exhibits India has about $6 billion value 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, protecting attorneys busy and their money registers ringing.
In an embarrassing episode, the federal government has twice revised its supply to draw regulation corporations for the LIC IPO.
In early September, after an preliminary lacklustre response, New Delhi restricted the timeline of the corporations’ IPO work to a few years.
Main corporations, resembling 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 mentioned.
The three corporations didn’t reply to queries from Reuters.
Authorities officers additionally lately known as a couple of high regulation corporations and nudged them to affix in IPO work, mentioned three regulation agency companions aware of the discussions.
This week, the federal government eased its charge cost timetables, to supply 50% cost after the draft IPO prospectus is filed.
However the IPO work on LIC is expansive and complicated, the regulation agency companions mentioned, which makes them even much less eager.
Legislation corporations should deal with 36 duties on the federal government’s to-do record 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,” mentioned one high companion in an Indian regulation agency.





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