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Foreign Investors May Be Allowed To Buy Up To 20% In India’s LIC IPO

Foreign Investors May Be Allowed To Buy Up To 20% In India’s LIC IPO
The Indian government could open up the initial public offering of state-owned Life Insurance Corporation to foreign institutional investors and allow them to purchase up to 20 per cent of the shares of the company, said reports quoting government sources.
India's largest ever initial public offering is expected to be LIC's listing. The government aims to raise as much as 900 billion rupees ($12.2billion) through its stake sale.
Currently, foreign institutional investors can hold up to 74% in private insurance companies, and up to 20% in state-owned banks. However, they are not allowed to own shares of LIC.
This would enable foreign pension funds, mutual funds and insurance companies to participate in the IPO India's largest insurer of life.
To help budgetary constraints, the government is determined to complete the listing by the end of this financial year. Late last month, 10 merchant banks were selected from the 16 that had submitted bids to kick-start it.
The merchant banks will be paid a total of 100 million rupees ($1.36million), which is higher than the token fees charged for some IPOs by state-owned companies in the past but still lower than the fees for private listings.
According to Dealogic, Zomato, a food delivery company, paid $31 Million in listing fees earlier this year.
The low fee has not deterred banks from queuing up, with almost all major banks except Morgan Stanley.
"We don't care much about the amount of money being offered. It is the largest IPO in recent years and will probably be the biggest for at least 5 more years," said a merchant banking professional.


Christopher J. Mitchell

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