The Indian government has launched an offer for sale (OFS) to sell up to a 6.5% stake in LIC at Rs 382 per share. The divestment, the first since LIC’s 2022 IPO, aims to raise public shareholding in the insurer to 10% and support India’s broader divestment push
India’s government launched an offer for sale (OFS) of up to a 6.5 per cent stake in Life Insurance Corporation of India (LIC), marking its first divestment in the country’s largest insurer since its blockbuster listing in 2022. The stake sale is aimed at helping LIC meet the minimum public shareholding (MPS) requirement ahead of the regulatory deadline.
The government has set a floor price of Rs 382 per share for the LIC OFS, which could fetch around Rs 31,400 crore ($3.29 billion) if the entire stake on offer is sold.
The OFS comprises a base offer of 2 per cent equity stake, with an option to sell an additional 4.5 per cent stake. The issue will open for non-retail investors on Tuesday and for retail investors on Wednesday.
The divestment will increase LIC’s public shareholding to 10 per cent from the current 3.5 per cent if the entire offer is subscribed.
The market regulator has allowed LIC to achieve the minimum 10 per cent public shareholding requirement by May 16, 2027. The government said the latest stake sale would help the insurer meet the milestone ahead of schedule.
“This (OFS) will help achieve MPS milestones ahead of schedule,” the Department of Investment and Public Asset Management (DIPAM) secretary said in a post on X.
More from BusinessFirst LIC stake sale since 2022 IPO
LIC made its stock market debut in May 2022 in one of India’s largest initial public offerings (IPOs), with the government selling a 3.5 per cent stake in the insurer.
The IPO raised around Rs 20,557 crore, making it India’s largest public issue at the time. However, the listing came amid challenging market conditions and the company’s shares have traded below the issue price for a significant period.
The latest OFS marks the first time the government is reducing its stake in LIC after the listing.
LIC shares closed 0.9 per cent higher at Rs 428.50 on Monday, above the OFS floor price of Rs 382 per share.
Part of India’s wider divestment push
The LIC stake sale comes as India accelerates its divestment and asset monetisation programme.
The government has set a divestment and asset monetisation target of Rs 80,000 crore for fiscal year 2026-27.
So far this year, the Centre has collected Rs 21,200 crore through stake sales, including divestments in companies such as NHPC, Coal India and Indian Railway Finance Corporation.
The government’s strategy has shifted in recent years from outright privatisation of state-owned companies towards minority stake sales and asset monetisation to raise resources while retaining control over strategic enterprises.
Why LIC public shareholding matters
Under India’s listing norms, listed companies are required to maintain a minimum level of public shareholding to ensure adequate market liquidity and wider investor participation.
LIC was granted additional time by regulators to meet the requirement due to its unique size and the scale of its IPO.
With a market capitalisation of more than Rs 6 lakh crore, LIC is among India’s largest listed companies and remains the dominant player in the country’s life insurance sector.
The OFS is expected to widen the insurer’s investor base while bringing the company closer to compliance with market regulations. For the government, the transaction provides a significant boost to its divestment receipts for the current fiscal year.
With inputs from agencies.
