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Tuesday, September 28, 2021

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

MUMBAI: India’s plans to listing state-run Life Insurance Corporation (LIC) face an uncommon downside: home law firms are shying away from advising the federal government, deterred by the low charges on provide on the time of a profitable growth in company inventory listings.
With hundreds of thousands of policyholders and a share of 66% of new premium collections in a crowded insurance market, LIC is a family title, managing property of greater than $450 billion.
The authorities is scrambling to listing the insurance behemoth by March, in an train set to be India’s largest IPO, at a possible $12 billion. As many as 16 world and home funding banks just lately bid to deal with it.
But prime law firms that might usually be eager on such large-ticket IPOs to increase their credibility in authorities circles are hesitant to advise New Delhi, as their groups are stretched by the company IPO growth, 5 law agency companions informed Reuters.
“Most big law firms in India are overburdened with IPO work,” mentioned Nitin Potdar, an M&A associate at prime Indian law agency J. Sagar Associates. “And the LIC IPO would need real big teams of experienced lawyers.”
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, mentioned law 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 law firms to submit bids.
Refinitiv knowledge exhibits India has about $6 billion value of IPOs within the pipeline.
After meals-supply giant Zomato’s $1.2 billion IPO in July, digital funds agency Paytm and trip-hailing giant 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 provide to appeal to law firms for the LIC IPO.
In early September, after an preliminary lacklustre response, New Delhi restricted the timeline of the firms’ IPO work to three years.
Leading firms, comparable to Cyril Amarchand Mangaldas, Shardul Amarchand Mangaldas and Khaitan & Co, would usually 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 firms didn’t reply to queries from Reuters.
Government officers additionally just lately referred to as a number of prime law firms and nudged them to take part IPO work, mentioned three law agency companions accustomed to the discussions.
This week, the federal government eased its charge cost timetables, to provide 50% cost after the draft IPO prospectus is filed.
But the IPO work on LIC is expansive and complicated, the law agency companions mentioned, which makes them even much less eager.
Law firms should sort out 36 duties on the federal government’s to-do listing for LIC, from drafting the IPO papers, and fielding regulators’ queries to reviewing company governance and pending litigation, and analysing dangers.
The quantity of work wanted could be as a lot as for 5 personal IPO offers, and nonetheless “it won’t be remunerative,” mentioned one prime associate in an Indian law agency.

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