MUMBAI, Sept 8 (Reuters Breakingviews) - Morgan Stanley (MS.N) has become the talk of the town in Mumbai financial circles. The investment bank run by James Gorman decided not to pitch for a role on what is set to be India’s biggest initial public offering, for state-owned Life Insurance Corp. Many bankers threw everything they had into the race to advise the household name that employs an army of more than 1 million sales agents and is synonymous with buying protection policies. Some joked they would have paid New Delhi to be on the transaction. The government gave the nod to 10 of them, including Kotak Mahindra (KTKM.NS), Goldman Sachs (GS.N), Citi (C.N), JPMorgan (JPM.N) and Bank of America (BAC.N). Officials are eyeing a deal worth 1 trillion rupees ($13.7 billion) comprised of an IPO and a follow-on, two bankers told Reuters Breakingviews. Assuming the first tranche is half the overall deal size, it could imply a $137 billion valuation for the insurer, since the regulator will now allow it to offer as little as 5% of its stock. Dealmakers won’t need to get creative to sell the profitable insurer, unlike for India’s flurry of mostly money-losing tech IPOs coming down the pipe including financial super-app Paytm which aims to raise some $2.2 billion. LIC is well known and operates in a clearly regulated, underpenetrated market and can be benchmarked against big, listed peers, including HDFC Life (HDFL.NS) and SBI Life (SBIL.NS). The deal will also be easier to value and sell than another similarly iconic government asset: Saudi Aramco’s (2222.SE) 2019 debut was tricky. MUMBAI, Sept 8 (Reuters Breakingviews) - Morgan Stanley (MS.N) has become the talk of the town in Mumbai financial circles. The investment bank run by James Gorman decided not to pitch for a role on what is set to be India’s biggest initial public offering, for state-owned Life Insurance Corp. Many bankers threw everything they had into the race to advise the household name that employs an army of more than 1 million sales agents and is synonymous with buying protection policies. Some joked they would have paid New Delhi to be on the transaction. The government gave the nod to 10 of them, including Kotak Mahindra (KTKM.NS), Goldman Sachs (GS.N), Citi (C.N), JPMorgan (JPM.N) and Bank of America (BAC.N). Officials are eyeing a deal worth 1 trillion rupees ($13.7 billion) comprised of an IPO and a follow-on, two bankers told Reuters Breakingviews. Assuming the first tranche is half the overall deal size, it could imply a $137 billion valuation for the insurer, since the regulator will now allow it to offer as little as 5% of its stock. Dealmakers won’t need to get creative to sell the profitable insurer, unlike for India’s flurry of mostly money-losing tech IPOs coming down the pipe including financial super-app Paytm which aims to raise some $2.2 billion. LIC is well known and operates in a clearly regulated, underpenetrated market and can be benchmarked against big, listed peers, including HDFC Life (HDFL.NS) and SBI Life (SBIL.NS). The deal will also be easier to value and sell than another similarly iconic government asset: Saudi Aramco’s (2222.SE) 2019 debut was tricky. Those on the transaction will score league-table credit to brag about, and government brownie points. Usually that’s not to be sniffed at, not least by an equity capital markets behemoth like Morgan Stanley. So far this year it isn’t a top-five player in India for either IPO and follow-on fees or overall equity capital market volumes, per Dealogic. The fees are derisory, though: The banks will share $1.4 million, a miniscule 0.01% of the deal size, compared to 2.4% collected by managers on Zomato’s (ZOMT.NS) soaring food delivery debut in July. Morgan Stanley worked on that transaction and is prepping IPOs for Go Airlines and Ola, among others. It’s also a top banker to Asia’s richest man, Mukesh Ambani, and his Reliance Industries (RELI.NS). Its book of business may be what’s giving the U.S. investment bank, long a participant in government stake sales, the confidence to pass up the sale of the state’s crown jewel. As long as New Delhi doesn’t read its LIC decision as a snub, there’s logic to the decision. Follow @ugalani on Twitter CONTEXT NEWS - Kotak Mahindra, Goldman Sachs, JPMorgan and Citi are among 10 banks picked to take Life Insurance Corp of India public in what is set to be the country’s biggest ever initial public offering. Other banks mandated include SBI Capital, Bank of America, Nomura, Axis, JM Financial and ICICI, Reuters reported.