The government has asked regulators for a rapid review of Life Insurance Corporation’s draft prospectus, two knowledgeable government sources said – as it pulls out all the stops to complete the country’s largest IPO by the end of March.
The Securities and Exchange Board of India (SEBI) has been urged to complete the vetting process in less than three weeks instead of the 75 days normally required, they said.
“We have 10 bankers on the deal. They are available 24/7 for any questions SEBI might have,” said one of the government officials, adding that a “clean” draft prospectus would be submitted.
The official also said the government’s divestment division was solely focused on the IPO for the giant state-backed insurer it hopes to win a staggering $12 billion, and had put aside other privatization plans for this fiscal year.
The draft prospectus is likely to be submitted to SEBI in the coming days, the sources said, who were not authorized to speak to the media and declined to be identified.
The Treasury Department, SEBI and LIC did not respond to requests from Reuters for comment.
Prime Minister Narendra Modi’s government has repeatedly pledged to list LIC by the end of the fiscal year and wants to avoid losing face and accelerate its privatization program aimed at replenishing the state treasury.
LIC, which has nearly $500 billion in assets and controls more than 65% of the Indian life insurance market, is also doing everything it can to ensure its IPO is a success.
In addition to heavy ads in local newspapers, some 1.2 million field agents have been sent across the country to persuade many of the more than 250 million policyholders to become retail investors for the first time. Policyholders have also received a text message recommending that they open an electronic stock holding account early so that they can participate in the IPO.
How successful an LIC stock sale will be, however, remains an open question.
The government wants to raise a whopping $12 billion from the IPO. Selling 5% of LIC’s shares to win that amount would be an indication of success, but the government is also willing to consider selling as much as 10%, government and banking sources said.
“We’ve never seen an issue of this magnitude in the Indian market and while we know a company like LIC will turn heads, it may not be that simple,” said a Mumbai-based investment banker who worked on the IPO.
“There are still many moving pieces to make this IPO a success,” he added.
With LIC as a household name in the country, bankers working on the IPO say they are confident in robust demand from retail investors, but the strength of institutional demand will be critical.
Much of LIC’s financial data, including its embedded value – a measure of future cash flow for life insurance companies and the main financial measure for insurers, has yet to be released.
Many investors are also likely to be concerned that the LIC’s investment decisions, including those in loss-making state-owned companies, could be influenced by government demands.
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)