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India keeps LIC OFS details secret to prevent pre-sale stock pressure
Officials kept the OFS launch timing and deal parameters under wraps, moving ahead of LIC’s planned quarterly earnings and raising $3.3 billion through what is described as India’s biggest secondary exchange offering.
LiveMint Markets reports that India’s government-led sale of Life Insurance Corp. of India shares, an offer for sale valued at $3.3 billion, was structured with unusually tight information controls. Officials in the state divestment department kept the OFS launch date and key deal details closely held, even from some advisers, to reduce the risk that traders would take positions ahead of time and push the stock lower before the government could sell its stake.
According to LiveMint Markets, banks advising on the transaction were notified at different times, with one adviser learning of the decision shortly before telling the stock exchanges on Monday. Hours before the OFS was launched, a banker was reportedly summoned in New Delhi and asked to prepare the exchange filing after officials indicated the sale would start that evening, with additional advisers added only after the close of market hours.
The report also says the deal was brought forward from market expectations of it occurring after LIC’s quarterly earnings on Thursday. Officials and bankers believed that keeping investors guessing would help support the stock price, and they aimed for higher subscription odds by selling an initial 2.5% stake while retaining an option to increase the offer by another 4% if demand proved strong.
LiveMint Markets adds that advisers on the deal forwent advisory fees, after one investment bank agreed to work for free during the request-for-proposal process. It notes this approach followed a common pattern in India’s government-linked transactions, where symbolic fees are sometimes used for prestige and longer-term relationships.