Mumbai: India’s plan to register the Life Insurance State managed by the Government (LIC) faces unusual problems: Domestic law firm avoids advising the government, blocked by low costs offered at the time of a favorable boom in the corporate status list.
With millions of policy holders and the 66% share of the new premium collection in a crowded insurance market, LIC is a household name, managing assets of more than $ 450 billion.
The government scrambled to register the insurance giant in March, in the exercise set into the largest IPO in India, at a possibility of $ 12 billion.
A total of 16 global and domestic investment banks have recently bid to handle it.
But the top law firm will usually be interested in such a large ticket IPO to increase their credibility among the government hesitant to suggest New Delhi, because their team stretched by the company’s IPO boom, five law firm partners told Reuters.
“Most major law firms in India are burdened with IPO work,” said Nitin Potdar, M & A partner at the Indian law firm J.
Associates J.
Sagar.
“And LIC IPO will need a real big team from experienced lawyers.” Big size and complex and complex business structures make it “nightmare” for lawyers to compile prospectus, he added.
Unattractive costs are other dampener, said the law firm partner, which speaks with the terms of anonymity to avoid government retaliation.
The Ministry of Finance, which handles the IPO process, does not immediately respond to a comment request.
Thursday is the deadline for law firms to bid.
Refinitiv data shows India has around $ 6 billion IPOS in the pipe.
After administering the giant food of the $ 1.2 billion IPO in July, the Paytm digital payment company and the Ride-Hailing Ola giant targeted the market debut, making their busy lawyers and cash registers ringing.
In embarrassing episodes, the government has revised its offer twice to attract law firms for LIC IPO.
In early September, after the initial Loyo response, New Delhi limited the timeline from the company’s IPO work to three years.
Leading companies, such as Cyril Amarchand Mangaldas, Shardul Amarchand Mangaldas and Khait & Co, will usually be interested in government IPOs with this size, but do not bid in the first tender, the source is realized.
Three companies did not respond to questions from Reuters.
Government officials were also recently called several upper class law firms and encouraged them to join the IPO work, said three law firm partners who were familiar with the discussion.
This week, the government relieves the payment schedule for its costs, to offer 50% payment after the draft IPO prospectus is submitted.
But IPO work on LIC widespread and complex, said legal firm partners, which made them less interested.
Law firms must handle 36 tasks on the Government Task List for LIC, from compiling IPO letters, and field regulator questions to review corporate governance and analyze risk.
The amount of work needed will be as much as five private IPO offers, and still “it will not remunorate,” said one top partner at the Indian law firm.