Govt to sell up to 6.5% stake in LIC via OFS at ₹382/share; retail investors to bid on Wednesday
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The Centre on Monday announced an offer for sale (OFS) of a 2.5% stake in Life Insurance Corporation of India (LIC) at a floor price of ₹382 per share, with an option to sell an additional 4% stake through a greenshoe option if demand remains strong.
The offer will open for non-retail investors on Tuesday, while retail investors will be able to place bids on Wednesday, according to a post by Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla on X.
"Offer for Sale in LIC opens tomorrow for Non-Retail investors. Retail investors can bid on Wednesday. Government offers to disinvest 2.5% equity with an additional 4% as a green shoe option. Floor price has been fixed as Rs 382 per share. This will help achieve MPS milestones ahead of schedule," Chawla said in the post.
Aimed at meeting public shareholding norms
The proposed stake sale forms part of the government's broader disinvestment programme and is aimed at increasing LIC's public shareholding to comply with the Securities and Exchange Board of India's (Sebi) minimum public shareholding (MPS) requirements.
An OFS allows promoters of listed companies to sell shares through the stock exchange in a transparent bidding process. Typically, institutional and non-retail investors participate on the first day, while retail investors bid on the second day.
The government currently remains the majority shareholder in LIC and has been gradually reducing its stake since the insurer's market debut.
Greenshoe option offers flexibility
The base offer comprises a 2.5% equity sale, while the additional 4% greenshoe option gives the government the flexibility to offload more shares in the event of robust investor demand.
The final size of the stake sale will depend on subscription levels during the bidding process.
The transaction is expected to help the government move closer to achieving the minimum public shareholding threshold for LIC ahead of the regulatory timeline, according to the DIPAM Secretary's statement.
LIC was listed on the stock exchanges in May 2022 after raising about ₹20,557 crore through its initial public offering, which was India's largest at the time. The record was subsequently surpassed by Hyundai Motor India's ₹27,870-crore IPO in 2024. Since listing, the Centre has been pursuing a calibrated stake dilution strategy in the state-owned insurer as part of its disinvestment programme while working towards compliance with public shareholding norms.
Shares of LIC ended Monday's session 0.89% higher at ₹428.50 apiece on the NSE. Despite the day's gains, the stock has declined over 3% in the past year, underperforming the Nifty 500 index, which has gained nearly 5% during the same period.