The 10 advisers who manage the initial public offering They will receive around Rs 10 million ($129,000) each for their role in the deal, a fraction of what they would normally pocket for a deal of this size
Mumbai:
investment banks advising on the initial public offering of life insurance corporation of India are forgoing the hefty fees expected from the country’s biggest-ever listing and settling for glory in the league table standings.
The 10 advisers who manage the initial public offering They will receive around Rs 10 million ($129,000) each for their role in the deal, a fraction of what they would normally pocket for a deal of this size.
Earnings are further cut because the Indian government, which owns driver’s license will not compensate banks for expenses such as printing forms for issuance.
What bankers stand to gain is outsized credit in rankings that compare rivals by the volume of transactions they handle, which may be influential in winning them jobs in the future.
The rate estimates are from people familiar with the developments, who asked not to be identified because the information is still private.
A company would typically pay bank fees of 1.25% to 1.5% of the issue size for a comparable listing, one of the people said. For LIC’s initial public offering, which at the higher end of the price band would raise $2.7 billion, a fee of that size would amount to $40.5 million, according to calculations by Bloomberg.
The fee for LIC was agreed with the government before the prospectus was filed, the people said. The organizers also agreed to bear some additional costs, including travel for investor presentations and hosting news conferences, the people said.
Banks spent less than expected on travel as road meetings were held virtually, one of the people said.
Investors had submitted nearly twice as many orders as shares were available before the offering closed on Monday.
A Finance Ministry spokesman declined to comment. Representatives from Bank of America Corp., ICICI Securities Ltd., JM Financial Ltd., JPMorgan Chase & Co. and Nomura Holdings Inc. also declined to comment, while Axis Capital Ltd., Citigroup Inc., Goldman Sachs Group Inc., Kotak Mahindra Capital Co. and OSE Capital Markets Ltd. did not immediately respond to requests for comment.