India\u2019s plans to list state-run Life Insurance Corporation (LIC) face an unusual problem domestic law firms are shying away from advising the government, deterred by the low fees on offer at the time of a lucrative boom in corporate stock listings.<\/p>\n
With millions of policy holders and a share of 66% of newpremium collections in a crowded insurance market, LIC is a household name, managing assets of more than $450 billion.<\/p>\n
The government is scrambling to list the insurance behemoth by March, in an exercise set to be India\u2019s biggest IPO, at a probable $12 billion. As many as 16 global and domestic investment banks recently bid to handle it.<\/p>\n
But top law firms that would normally be keen on such big-ticket IPOs to boost their credibility in government circles are hesitant to advise New Delhi, as their teams are stretchedby the corporate IPO boom, five law firm partners told Reuters.<\/p>\n
\u201cMost big law firms in India are overburdened with IPOwork,\u201d said Nitin Potdar, an M&A partner at top Indian law firm J. Sagar Associates. \u201cAnd the LIC IPO would need real big teams of experienced lawyers.\u201d<\/p>\n
LIC\u2019s massive size and complex business structure andproducts make it a \u201cnightmare\u201d for lawyers to draft the prospectus, he added.<\/p>\n
The unappealing fees are another dampener, said law firmpartners, who spoke on condition of anonymity to avoid government reprisals.<\/p>\n
The finance ministry, which is handling the IPO process, did not immediately respond to requests for comment.<\/p>\n
September 16 is the deadline for the law firms to submit bids.<\/p>\n
Refinitiv data shows India has about $6 billion worth of IPOs in the pipeline.<\/p>\n
After food-delivery giant Zomato\u2019s $1.2 billion IPO in July, digital payments firm Paytm and ride-hailing giant Ola are eyeing market debuts, keeping lawyers busy and their cash registers ringing.<\/p>\n
In an embarrassing episode, the government has twice revised its offer to attract law firms for the LIC IPO.<\/p>\n
In early September, after an initial lacklustre response, New Delhi limited the timeline of the firms\u2019 IPO work to three years.<\/p>\n
Leading firms, such as Cyril Amarchand Mangaldas, Shardul Amarchand Mangaldas and Khaitan & Co, would typically be keen ona government IPO of this size, but did not bid in the first tender, sources aware of the matter said.<\/p>\n
The three firms did not respond to queries from Reuters.<\/p>\n
Government officials also recently called a few top law firms and nudged them to join in IPO work, said three law firm partners familiar with the discussions.<\/p>\n
This week, the government eased its fee payment timetables, to offer 50% payment after the draft IPO prospectus is filed.<\/p>\n
But the IPO work on LIC is expansive and complex, the lawfirm partners said, which makes them even less keen.<\/p>\n
Law firms must tackle 36 tasks on the government\u2019s to-dolist for LIC, from drafting the IPO papers, and fielding regulators\u2019 queries to reviewing corporate governance andpending litigation, and analysing risks.<\/p>\n
The amount of work needed would be as much as for fiveprivate IPO deals, and still \u201cit won\u2019t be remunerative,\u201d said one top partner in an Indian law firm. <\/p>\n