LIC shares fall 8% as govt launches OFS to sell up to 6.5% stake worth ₹31,000 crore
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Shares of Life Insurance Corporation (LIC) of India plunged nearly 8% in early trade on Tuesday after the Centre announced plans to divest up to a 6.5% stake in the state-owned insurer through a two-day offer for sale (OFS), which opened for institutional investors today.
The proposed stake sale, one of the government's largest disinvestment initiatives in recent years, could fetch over ₹31,000 crore if the entire 6.5% stake, including the greenshoe option, is sold. The OFS floor price has been fixed at ₹382 per share, representing a discount of around 10% to LIC's previous closing price of ₹424.35.
Reacting to the announcement, LIC shares tumbled as much as 7.92% to ₹390.70 apiece in opening trade, eroding nearly ₹35,000 crore from the insurer's market capitalisation, which slipped to around ₹5.01 lakh crore. The stock had ended Monday's session 0.12% lower at ₹424.35 on the BSE, valuing the company at ₹5.36 lakh crore.
The issue opens for non-retail investors today, while retail investors can place their bids on Wednesday. The government plans to sell an initial 2.5% stake, with an option to offload an additional 4% through the greenshoe option if demand remains strong.
The Centre currently owns 96.5% of LIC. If the greenshoe option is fully exercised, the government's holding in the insurance giant will decline to 90%, bringing it closer to meeting Sebi's minimum public shareholding requirements.
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) norms.
"Offer for Sale in LIC opens tomorrow for non-retail investors. Retail investors can bid on Wednesday. The government is offering to divest a 2.5% equity stake, with an additional 4% available under the green shoe option. The floor price has been fixed at ₹382 per share. This will help achieve MPS milestones ahead of schedule," Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said in a post on X.
LIC was listed on the stock exchanges in May 2022 after raising about ₹20,557 crore through its initial public offering (IPO), which was India's largest at the time. In April this year, the insurer announced its first-ever bonus issue since listing, proposing a 1:1 bonus share issue that is expected to double the holdings of its nearly 22 lakh shareholders. The bonus issue, valued at around ₹6,352 crore, will be funded through the capitalisation of reserves, converting accumulated profits into equity without any cash outflow.
For the April-June quarter of FY27, LIC reported a 5.02% year-on-year increase in profit after tax (PAT) to ₹10,986 crore, compared with ₹10,461 crore in the corresponding quarter of the previous fiscal. The growth was driven by a higher value of new business (VNB), improved margins and strong premium income growth. Total premium income rose 4.77% year-on-year to ₹1,19,200 crore during the quarter, up from ₹1,13,770 crore a year earlier.
As of June 30, 2026, LIC's assets under management (AUM) stood at ₹57,05,341 crore, compared with ₹53,58,781 crore as of June 30, 2025, registering a 6.47% year-on-year increase.
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