Tag: LIC

Most merchant bankers indicate 52 weeks’ time, BFSI News, ET BFSI

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Most of the merchant bankers who had submitted bids for facilitating strategic sale of LIC-controlled IDBI Bank indicated a time-frame of one year to complete the elaborate process, sources said.

During a presentation before the Department of Investment and Public Asset Management (DIPAM) held recently, most of the eligible transaction advisers gave a time-frame of 50-52 weeks to undertake several stages of the privatisation process of IDBI Bank, market sources said.

However, the government intends to complete the transaction during the current fiscal itself. Thus the merchant banker has to find a buyer in about 26 weeks or six months.

According to market sources, as many as seven bids — Deloitte Touche Tohmatsu India LLP, Ernst and Young LLP, ICICI Securities Ltd, JM Financial Ltd, KPMG, RBSA Capital Advisors LLP and SBI Capital Markets Ltd — were received.

DIPAM on behalf of Government of India had floated a tender in June inviting bids from transaction advisors from reputed professional consulting firms or investment bankers or merchant bankers or financial institutions for facilitating and assisting strategic disinvestment of IDBI Bank. The last date for submission of bids was July 13.

KPMG placed the lowest bid of Re 1, and was selected as the transaction adviser, market sources said, adding, the firm will assist the government in the sale for Re 1.

The Cabinet had in May given in-principle approval for IDBI Bank’s strategic disinvestment along with transfer of management control.

The central government and LIC together own more than 94 per cent equity of IDBI Bank. LIC, currently having management control, has 49.24 per cent stake, while the government holds 45.48 per cent. Non-promoter shareholding stands at 5.29 per cent.

The transaction advisor would be required to advise and assist the government on modalities of disinvestment and the timing; recommend the need for other intermediaries required for the process of sale/disinvestment and also help in identification and selection of the same with proper Terms of Reference.

The transaction advisor will also assist in preparation of all documents like Preliminary Information Memorandum (PIM), organise roadshows to generate interest among the prospective buyers and suggest measures to fetch optimum value.

The advisor would also be supporting IDBI Bank in setting up an e-data room and assisting in the smooth conduct of the due diligence process.

As per the eligibility criteria outlined in the RFP, the bidders should have advised at least one transaction of strategic disinvestment/strategic sale/M&A activities/private equity investment transaction of the size of Rs 5,000 crore or more during the period from April 2016 to March 2021.

The extent of shareholding to be divested by the central government and LIC shall be decided at the time of structuring of transaction in consultation with the RBI, the government had earlier said.

Insurance giant LIC had acquired controlling stake in IDBI Bank in January 2019.

Finance minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal.

The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation. Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and Rs 75,000 crore through CPSE disinvestment receipts.



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LIC launches mobile app for its Development Officers

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Life Insurance Corporation of India (LIC) has launched a new mobile app for exclusive use of its Development Officers.

Called PRAGATI (Performance Review Application, Growth And Trend Indicator), it is a comprehensive mobile application which gives information that is updated near real-time on the performance of their agency force in critical areas of business like premium collection and agency activisation, apart from monitoring the team in activities such as usage of agents mobile app and NACH validations, LIC said in a statement.

Also see: LIC launches Ananda mobile app for agents, intermediaries

There is also a calculator that measures their cost ratio, it added.

“We believe that this mobile app, PRAGATI, will be a major asset in the arsenal of our development officers which will empower them to plan their business strategies and monitor the performance of their team,” it said.

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Govt appoints 10 merchant bankers for managing LIC IPO, BFSI News, ET BFSI

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The government has appointed 10 merchant bankers including Goldman Sachs (India) Securities, Citigroup Global Markets India, and Nomura Financial Advisory and Securities India to manage the mega initial public offering of country’s largest insurer LIC. Other selected bankers include SBI Capital Market, JM Financial, Axis Capital, BofA Securities, JP Morgan India, ICICI Securities, and Kotak Mahindra Capital Co Ltd, a circular on the divestment department website said.

“Government has finalised the book running lead managers and some other advisors for the IPO of LIC,” DIPAM Secretary Tuhin Kanta Pandey tweeted.

The disinvestment department had invited applications for the appointment of merchant bankers on July 15. Following this, 16 merchant bankers made presentations for managing listing and partial disinvestment of Life Insurance Corporation (LIC).

The Department of Investment and Public Asset Management (DIPAM) is also in the process of appointing a legal adviser for the stake sale and the last date for putting bids is September 16.

Actuarial firm Milliman Advisors LLP India has already been appointed to assess the embedded value of LIC ahead of the IPO, which is likely in the January-March quarter of 2022.

The government is also mulling allowing foreign investors to pick up stakes in the country’s largest insurer LIC. As per Sebi (Securities and Exchange Board of India) rules, foreign portfolio investors (FPI) are permitted to buy shares in a public offer.

However, since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation.

The Cabinet Committee on Economic Affairs had last month cleared the initial public offering proposal of Life Insurance Corp of India.

The ministerial panel known as the Alternative Mechanism on strategic disinvestment will now decide on the quantum of stake to be divested by the government.

“The potential size of the IPO is expected to be far larger than any precedent in Indian markets,” the department had said.

The listing of LIC will be crucial for the government in meeting its disinvestment target of Rs 1.75 lakh crore for 2021-22 (April-March).

So far this financial year, Rs 8,368 crore has been mopped up through minority stake sales in PSU and the sale of SUUTI (Specified Undertaking of the Unit Trust of India) stake in Axis Bank.



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Bank of India announces closure of QIP issue; raises Rs 2,550 cr , BFSI News, ET BFSI

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New Delhi: Bank of India on Tuesday announced the closure of its QIP issue and said that it has raised Rs 2,550 crore by issuing more than 40.5 crore shares to the qualified institutional buyers. The capital issue committee at its meeting held on August 31, 2021 has approved the issue and allotment of 40,54,71,866 equity shares to eligible qualified institutional buyers (QIBs) at an issue price of Rs 62.89 per share, aggregating to Rs 2,550.01 crore, Bank of India said in a regulatory filing on Tuesday.

The issue had opened on August 25, and closed on August 30, 2021, and the bank had targeted to raise up to Rs 3,000 crore equity capital through this issue.

LIC, ICICI Prudential Life Insurance Company and Bajaj Allianz Life Insurance Company are the three investors who subscribed to more than 5 per cent of the equity offered in the qualified institutional placement (QIP) issue.

Life Insurance Corporation (LIC) has been allotted 15,90,07,791 shares (39.22 per cent), while ICICI Pru Life and Bajaj Allianz Life subscribed to 3,18,01,558 shares (7.84 per cent) each under the QIP offer, Bank of India said.

With this QIP, government shareholding in the bank has come down to 82.50 per cent from 90.34 per cent earlier.

“Pursuant to the allotment of equity shares in the issue, the paid-up equity share capital of the bank stands increased from Rs 3,698.09 crore to Rs 4,103.57 crore comprising of 410,35,66,070 number of equity shares,” the state-owned lender said.

The bank scrip was trading at Rs 66.75 apiece on BSE, down 1.84 per cent over its previous close.



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10 banks selected to manage LIC IPO, BFSI News, ET BFSI

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The central government has selected 10 investment banks to handle the initial public offering of Life Insurance Corp of India planned for this fiscal year.

They include Goldman Sachs, Citigroup, Kotak Mahindra and SBI Caps, Reuters quoted government sources as saying.

Sixteen banks, including seven global banks and nine domestic bank, were in the race.

Other selected lenders include JM Financial Ltd, Axis Capital, Nomura, BofA Securities, J.P. Morgan India Pvt Ltd, ICICI Securities, according to the report.

In July, the cabinet committee on economic affairs, or CCEA, gave its in-principle approval to list LIC.

A 10% stake sale in the insurer could fetch around Rs 1-1.5 lakh crore as per industry estimates. A ministerial panel, called the Alternative Mechanism on strategic Divestment, is expected to decide soon on the size of the stake to be sold. It could be around 10%, sold in two tranches, the sources said.

“The potential size of the IPO is expected to be far larger than any precedent in Indian markets,” one of the sources said, adding that roadshows would be held in coming months in all major global financial centres to attract investors.

LIC, India’s biggest insurance company with assets of over Rs 34 lakh crore ($461.4 billion), has a subsidiary in Singapore and joint ventures in Bahrain, Kenya, Sri Lanka, Nepal, Saudi Arabia and Bangladesh.

The government is simultaneously pursuing strategic disinvestment in companies such as Air India and BPCL.

The government is also looking to complete at least three public sector disinvestment transactions before rolling out the mega IPO of the national insurer.



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LIC launches Ananda mobile app for agents, intermediaries

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Life Insurance Corporation of India (LIC) has launched Ananda mobile app.

“Atma Nirbhar Agents New Business Digital Application, the digital paperless solution for new business processes in LIC has now been provided a new dimension with the launch of Ananda mobile app,” LIC said in a statement.

Built on paperless KYC process using Aadhaar based e-authentication of the life proposed, the digital application is a tool for the on boarding process to get the life insurance policy through a paperless module with the help of the agent or intermediary, it further said

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Canara Bank raises ₹2,500 crore through QIP issue

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Life Insurance Corporation of India (LIC), BNP Paribas Arbitrage, Societe Generale and Indian Bank are among the qualified institutional buyers (QIBs) allotted more than 5 per cent equity shares in Canara Bank’s qualified institutions placement (QIP) issue aggregating ₹2,500 crore.

As per the latest shareholding pattern, big bull Rakesh Jhunjhunwala has picked up 1.59 per cent stake in Canara Bank.

The public sector bank, in a regulatory filing, said the Sub-Committee of the Board — Capital Planning Process of its Board of Directors, at its meeting held on August 24, 2021, approved the allotment of about 16.73 crore equity shares to eligible QIBs at an issue price of ₹149.35 per equity share.

The QIP opened on August 17 and closed on August 23.

LIC accounted for 15.91 per cent of the total QIP issue size, followed by BNP Paribas Arbitrage (12.55 per cent), Societe Generale (7.97 per cent), Indian Bank and ICICI Prudential Life Insurance Company (6.37 per cent each), Morgan Stanley Asia (Singapore) Pte – ODI (6.16 per cent) and Volrado Venture Partners Fund II (6.05 per cent).

Following the QIP, the Central government’s stake in Canara Bank, as on August 24, 2021, has come down to 62.93 per cent stake (against 69.33 per cent in the quarter ending June 30, 2021).

The shareholding of LIC, which is single largest public shareholder, has gone up from 8.11 per cent to 8.83 per cent stake.

Canara Bank shares closed at ₹151.05 apiece, down 2.99 per cent over the previous close on BSE.

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India considers allowing foreign direct investment in Life Insurance Corp

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India is considering allowing foreign direct investment in Life Insurance Corporation, according to a person familiar with the matter, which could enable a single overseas investor to buy a large stake in the firm that’s headed for a mega-IPO.

Any strategic investment would be subject to a cap, though it’s unclear at what level that would be set, the person said, asking not to be identified as the deliberations are private. Participants at a meeting earlier this month noted a 20 per cent FDI limit on State-run banks, the person said.

Allowing FDI in LIC would permit so-called strategic investors such as massive pension funds or insurance firms to participate in the initial public offering, which is slated to be India’s largest ever. The Reserve Bank of India defines FDI as purchase of a stake that’s 10% or larger by an individual or entity based abroad.

Bankers seeking to arrange LIC’s IPO are due to make presentations to the government Thursday. Prime Minister Narendra Modi’s administration — which owns 100 per cent of LIC — is looking at the sale to help narrow its budget gap to 6.8 per cent of gross domestic product in the year through March 2022.

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 wrote in a February note.

While FDI of as much as 74 per cent is permitted in most Indian insurers, the rules don’t apply to LIC because it is a special entity created by an act of parliament, the person said, adding that the discussions regarding FDI are at an early stage and no final decision has been reached yet. A spokesperson for the finance ministry couldn’t be immediately reached for comment.

BNP Paribas SA, Citigroup Inc. and Goldman Sachs Group are among seven foreign banks vying to manage the IPO. Nine Indian firms include HDFC Bank Ltd. and Axis Capital.

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Canara Bank allots over 16.73 cr shares in Rs 2,500 cr QIP, BFSI News, ET BFSI

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State-run Canara Bank on Tuesday said it has approved allotment of over 16.73 crore shares in the Rs 2,500 crore qualified institutions placement (QIP) that closed a day earlier. The QIP opened on August 17 and closed on August 23, 2021.

The sub-committee of the board, capital planning process of the board of directors of the bank, at its meeting held on August 24, 2021, approved the allotment of 16,73,92,032 equity shares to eligible qualified institutional buyers at an issue price of Rs 149.35 per equity share, aggregating up to Rs 2,500 crore, Canara Bank said in a regulatory filing.

With this, the paid-up equity share capital of the bank stands increased to Rs 1,814.13 crore from Rs 1,646.74 crore, it said.

A total of seven investors have been allotted more than 5 per cent of the equity offered in the QIP issue, said the Bengaluru-based lender.

LIC subscribed to 15.91 per cent; BNP Paribas Arbitrage 12.55 per cent; Societe Generale 7.97 per cent; Indian Bank and ICICI Prudential Life Insurance – 6.37 per cent each.

Morgan Stanley Asia (Singapore) Pte-ODI bought 6.16 per cent of the shares issued in QIP and Volrado Venture Partners Fund II 6.05 per cent.

Canara Bank stock traded at Rs 154.80 apiece on BSE, up by 1.31 per cent from its previous close. PTI KPM ANS ANS



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FM Sitharaman on LIC IPO, BFSI News, ET BFSI

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While all eyes are on India’s biggest issue of the year, Finance Minister Nirmala Sitharaman said she’s yet to disclose the proportion being sold off in the IPO of Life Insurance Corp. (LIC). Sitharaman exclaimed, in an exchange with ET, that LIC did not have an ’embedded’ valuation mechanism.

ET asked her if she commits that the government stake would stay above 51% with general insurance companies to which she attested that she will have ‘government’s presence’ in that area and that it will obviously hold stake.

“We will have a fix obviously, but I will tell you only when I’m ready to tell you. The time which has been consumed for this is only to get the mechanisms put in place. You will know how unprepared public sector companies are for even facing their own realities. They (LIC) did not have an embedded valuation mechanism. Will you believe it!,” she replied on being inquired about there being a fix on how much stake the government will divest in LIC.

“Yes, it is an IPO,” validated Sitharaman on whether the government will maintain its stake at about 51% in case of the LIC IPO too.

‘Bare minimum’ presence of government will be there in all three segments of Insurance- life insurance, general insurance and reinsurance, the Finance Minister confirmed while adding that insurance is also a part of core and strategic sector listed items.

Companies that can’t either be merged or brought in for a bigger scale will be disposed of.

LIC IPO is important for the government to meet its yearly disinvestment target of Rs. 1.75 lakh crore. Government has plans to privatise two public sector banks and one insurance firm.

Rs 1.75 lakh crore is expected to come from selling of government stake in state-run banks and financial institutions. While Rs 75,000 crore is projected to flow in through CPSE disinvestment receipts.

The size of the share sale will be decided by a commission led by Finance Minister Nirmala Sitharaman. For the proposed IPO, the government has revised the LIC Act of 1956. The LIC has appointed Arijit Basu, the former MD of State Bank of India and former MD & CEO of SBI Life, as a consultant to help execute the IPO.



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