BENGALURU/MUMBAI, Jan 13 (Reuters) – India’s Birla Group, controlled by billionaire Kumar Mangalam Birla, is in discussions to buy a significant stake in state-owned Life Insurance Corporation (LIC) ahead of the insurer’s planned initial public offering (IPO), three sources familiar with the matter told Reuters.
LIC plans to file its draft IPO prospectus with market regulator Securities and Exchange Board of India (SEBI) as early as next week, sources said, although they cautioned that the timing could change.
LIC is expected to seek a valuation of about $80 billion-$100 billion in the IPO, making it likely to be India’s biggest-ever IPO, eclipsing the $11.1 billion raised by Paytm last year.
All three sources said Birla Group is in discussions to buy around 5% in LIC, with one of the sources saying the deal, if agreed upon, could value LIC at about $80 billion-$85 billion.
Birla Group may also explore a role in managing LIC’s assets, which currently total about 40 trillion rupees ($538 billion), one of the sources said.
LIC, the country’s largest insurer, has a market share of more than 60% in India, which is the world’s fifth-biggest life insurance market, and is set to benefit from rising incomes and insurance penetration in the country.
The sources declined to be identified as the discussions are private. Birla Group did not respond to a request for comment, while LIC and SEBI declined to comment.
The Indian government, which owns LIC, plans to sell a 5% stake in the company, raising as much as $5 billion, as part of Prime Minister Narendra Modi’s plans to privatise some state-owned companies to reduce government spending and increase efficiency.
Last month, Reuters reported that private equity firm Carlyle Group Inc (CG.O) is in talks to buy about 5% in LIC via an off-market deal, a transaction that would value LIC at about $80 billion.
($1 = 74.5430 Indian rupees).
