24 Sep 2021

Law firms in race to work on India’s biggest-ever IPO as government sweetens deal

Country’s largest firm among those bidding to advise state-run Life Insurance Corporation on its estimated $12bn stock offering

The LIC building in New Delhi

The LIC building in New Delhi mrinalpal; Shutterstock

India’s largest law firm, Cyril Amarchand Mangaldas, is among a quartet of domestic firms competing to advise on the mega listing of Life Insurance Corporation (LIC), after New Delhi made the terms more attractive.

Crawford Bayley, Link Legal and Shardul Amarchand Mangaldas have also thrown their hats in the ring to advise on the IPO of the insurance behemoth, which manages assets of more than $450bn. The listing, slated to happen later this financial year, could see it become India's biggest company by market capitalisation with an estimated valuation of at least $109bn.

Despite market participants expecting it to be 'the IPO of the decade', law firms showed little interest to advise on the sale when New Delhi first invited bids in July. This is partly due to comparatively low fees on government mandates, but also because of the sheer complexity of the work.

The LIC’s massive portfolio of investments, complex business structure and array of products would make it a “nightmare for lawyers to draft the prospectus”, said Nitin Potdar, an M&A partner at Indian law firm J. Sagar Associates.

He added that LIC’s IPO would require a large team of experienced lawyers and most of the law firms who would usually compete for such work are already stretched in a booming IPO market, with a one-month period this summer seeing more than 30 companies file their draft offer document with the capital market regulator.

The government circulated a fresh invite for bids at the beginning of this month. It revised certain elements to attract interest, including paying the chosen adviser half of its fees during the IPO process and the balance after the listing, rather than paying only after successful completion of the transaction.

It also limited the timeframe of LIC’s IPO work to three years rather than keeping the timeline of the work open-ended like before.

Despite the lukewarm response from law firms, the IPO has attracted a lot of interest from international and domestic investment banks. Sixteen made a bid to manage the listing in August, with the government announcing this month it had chosen Goldman Sachs, JP Morgan, Citigroup, Nomura and Bank of America Securities, as well as domestic players JM Financial, SBI Capital Markets, Kotak Mahindra Capital, ICICI Securities and Axis Capital.

Crawford Bayley, Link Legal, Shardul Amarchand Mangaldas and Cyril Amarchand Mangaldas did not respond to requests for comment. All four firms will make their presentations to the department of investment and public asset management today, with government work typically granted based on the lowest bid.

The latter two firms were created after a legal battle split Amarchand & Mangaldas & Suresh A Shroff & Co in 2015, with brothers and managing partners Shardul and Cyril Shroff forming the separate entities. More recently, a bitter dispute between Mohit Saraf and Rajiv Luthra, co-founders of leading Indian firm L&L Partners, saw Saraf leave the firm in July with a team of 21 partners and nearly 100 professionals to form a new practice.

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