Life Insurance Corporation of India (LIC) completed a ₹31,500 crore offer for sale (OFS) this month, selling a 6.5% government stake at a floor price of ₹382 per share. The OFS was subscribed 1.2 times, but the four investment banks managing the transaction earned a combined fee of just ₹4 lakh, reigniting concerns about sharply discounted advisory fees in large deals, according to livemint.com.
The OFS involved four investment banks that aggressively undercut their fees to win the prestigious mandate, resulting in a total advisory fee that is negligible relative to the deal size. This pricing strategy has raised questions about the sustainability of such low fees and the impact on smaller advisory firms that may be priced out of major transactions. The subdued fee structure reflects intense competition among banks to secure marquee government deals.
This transaction highlights a broader trend in the Indian capital markets where investment banks are increasingly accepting minimal fees for large government share sales. The LIC OFS fee is among the lowest recorded for a deal of this magnitude, underscoring the pressure on advisory fees in the sector. Such dynamics could reshape fee structures for future public offerings and stake sales, affecting the economics of deal advisory services.
The LIC OFS concluded in August 2026 with a 1.2 times subscription, and the combined advisory fee of ₹4 lakh for the four banks marks a record low for a transaction of this scale, according to livemint.com.