Indian law firms reluctant to advise on IPO of insurance giant LIC

MUMBAI, Sept 15 (Reuters): India's 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.

With millions of policyholders and a share of 66 per cent of new premium collections in a crowded insurance market, LIC is a household name, managing assets of more than $450 billion.

The government is scrambling to list the insurance behemoth by March, in an exercise set to be India's biggest IPO, at a probable $12 billion. As many as 16 global and domestic investment banks recently bid to handle it.

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 stretched by the corporate IPO boom, five law firm partners told Reuters.

"Most big law firms in India are overburdened with IPO work," said Nitin Potdar, an M&A partner at top Indian law firm J. Sagar Associates. "And the LIC IPO would need real big teams of experienced lawyers."

LIC's massive size and complex business structure and products make it a "nightmare" for lawyers to draft the prospectus, he added.

The unappealing fees are another dampener, said law firm partners, who spoke on condition of anonymity to avoid government reprisals.

The finance ministry, which is handling the IPO process, did not immediately respond to requests for comment.

Thursday is the deadline for the law firms to submit bids.

Refinitiv data shows India has about $6 billion worth of IPOs in the pipeline.

After food-delivery giant Zomato's $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.

In an embarrassing episode, the government has twice revised its offer to attract law firms for the LIC IPO.

In early September, after an initial lacklustre response, New Delhi limited the timeline of the firms' IPO work to three years.