Government may allow foreign investors to buy up to 20% in LIC IPO: report

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The government plans to allow foreign institutional investors to buy up to 20 percent of the initial public offering of state-owned Life Insurance Corporation, a government source said on Wednesday.

LIC’s listing is expected to be the largest initial public offering in the country, with the government aiming to raise up to Rs 90,000 crore ($ 12.2 billion) through its sale of shares.

Currently, although foreign institutional investors are allowed to own up to 74 percent of private insurance companies and up to 20 percent of state-owned banks, they are not allowed to own shares of the LIC.

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This would allow foreign pension funds, insurance companies and mutual funds to participate in the IPO of India’s largest life insurer.

The government is keen to complete the list this fiscal year to help deal with budget constraints and at the end of last month it selected 10 of the 16 investment banks that had bid to start the process.

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In total, investment banks will charge a fee of around Rs 10 crore ($ 1.36 million), higher than the token fee charged on some public company IPOs in the past, but still significantly lower. at the expense for private registrations.

For example, food delivery start-up Zomato paid $ 31 million in fees to register earlier this year, according to Dealogic.

The low fees, however, were not a deterrent, with nearly all of the major banks preventing Morgan Stanley from standing in line.

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“We don’t care how much money is being offered. This is the biggest IPO in recent times and will probably be the biggest, say for another 5 years,” said an investment banker.

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