Edelweiss opts out of LIC pre-IPO advisor selection process

Edelweiss Financial Services has opted out of the process of pre-initial public offering (IPO) advisor selection on concerns related to conflict of interest. The financial services firm has written to the government and informed about its decision to voluntarily withdraw from the government process, the Moneycontrol reported citing unidentified sources. The development comes days after there were reports that Edelweiss Financial Services and Deloitte Touche Tohmatsu India LLP may have been selected as pre-IPO transaction advisors for the IPO and listing of insurance behemoth Life Insurance Corporation (LIC).

“Edelweiss has written to the government and voluntarily opted out of the process following concerns raised by the government on a potential conflict of interest scenario due to the firm’s existing life insurance joint venture with Tokio Marine,” the news website reported.

The advisor would hold the responsibility to ensure preparatory aspects of the proposed IPO, and advise and assist the government on modalities of IPO and the timing, structuring the transaction, organising non-deal roadshows, suggesting measures to fetch optimum value, positioning of the minority sale, among others.

The bidder would be required to have at least 3 years experience for providing advisory services for IPO or strategic disinvestment or strategic sale or M&A activities or private equity investment transaction, the Finance Ministry had earlier said in the Request For Proposal (RFP) for engaging pre-IPO transaction advisors.

“Bidders should have advised, handled, and completed at least one transaction of IPO of a size of Rs 5,000 crore or more between April 1, 2017 and March 31, 2020, or should have managed a capital market transaction of Rs 15,000 crore or more during the period,” the RFP added.

In the 2020-21 Budget, Finance Minister Nirmala Sitharaman had announced the government’s plan to sell a part of its stake in LIC by way of IPO. “Listing of companies on stock exchanges disciplines the company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created,” she had said. The LIC IPO is expected to contribute a huge chunk to the government’s budgeted disinvestment kitty of Rs 2.10 lakh crore this fiscal.