Goldman, JPMorgan said to be among banks hired for India’s blockbuster IPO

Goldman, JPMorgan said to be among banks hired for India’s blockbuster IPO
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(Aug 30): Goldman Sachs Group Inc., JPMorgan Chase & Co. and ICICI Securities Ltd. were among banks picked to work on Life Insurance Corp. of India’s initial public offering, in what’s set be the nation’s biggest listing.

Kotak Mahindra Capital Co., JM Financial Ltd., Citigroup Inc. and Nomura Holdings Inc. were also selected to work on the share sale that’s slated for early next year, after 16 investment banks presented their pitches to the government, people with knowledge of the matter said, asking not to be identified because the information isn’t public. 

Banks will start engaging with investors from September, with a potential listing expected between January and March next year, one of the people said.

Prime Minister Narendra Modi’s government is pushing ahead with LIC’s IPO to help plug a widening budget gap. The government is expected to dilute as much as 10% of its stake in the country’s largest insurance company as part of a broader divestment target. India may also allow foreign direct investment in LIC to ensure a diversified and strong demand across various segments of investors. 

‘Good demand’

“The timeline looks tight given that almost half the year is gone,” said Karthik Srinivasan, senior vice-president at ratings assessor ICRA Ltd. “Several variables need to come together including a conducive external condition, regulatory changes to insurance laws, understanding LIC’s business.”

Still, “with the world awash with liquidity and only a few listed insurance companies in India, unlike banks where there are plenty of choices, we should see good demand for the IPO,” Srinivasan said.

Indian banks Foreign firms
Kotak Mahindra Capital Co. Goldman Sachs Group Inc.
ICICI Securities Ltd. JPMorgan Chase & Co.
JM Financial Ltd. Nomura Holdings Inc.
Axis Capital Citigroup Inc.
SBI Capital Markets Bank of America Corp.

The listing could value LIC at as much as $261 billion, based on its assets under management and using private sector insurers as a benchmark, analysts at Jefferies India led by Prakhar Sharma wrote in a February note. That would make it bigger than Reliance Industries Ltd., which is currently India’s largest listed company with a market value of about $183 billion.

Representatives for Citigroup, ICICI Securities, Goldman and JPMorgan declined to comment. Emails to the other banks weren’t answered. A finance ministry spokesperson couldn’t be reached for comment.