Govt to offload up to 6.5% stake in LIC through OFS opening Tuesday

Centre will offer a 2.5% stake with a 4% greenshoe option at a floor price of ₹382 a share, helping LIC meet minimum public shareholding norms ahead of schedule

The government is set to offload up to a 6.5 per cent stake in Life Insurance Corporation of India (LIC) through an offer for sale (OFS) that opens on Tuesday, Department of Investment and Public Asset Management (Dipam) Secretary Arunish Chawla said on Monday.

 

“Offer for sale in LIC opens tomorrow for non-retail investors. Retail investors can bid on Wednesday,” Chawla said in a post on X. “Government offers to disinvest 2.5 per cent equity with an additional 4 per cent as a greenshoe option. Floor price has been fixed at ₹382 per share,” Chawla added.

 

The Centre currently owns a 96.5 per cent stake in LIC, which may decline to 90 per cent if the government exercises the greenshoe option. The government has to reduce its holding in LIC to 90 per cent by May next year under the Securities and Exchange Board of India’s (Sebi’s) relaxed roadmap for the insurer to meet the minimum public shareholding (MPS) norms.

 

 

“This (the OFS) will help achieve MPS milestones ahead of schedule,” Chawla said in his post.

 

Following the sale of the government’s 3.5 per cent stake in the insurance behemoth through an initial public offering (IPO) in 2022, Sebi allowed LIC a relaxed timeline to reach the initial 10 per cent public shareholding threshold by May 2027 and 25 per cent by 2032.

 

The stake sale, accounting for the green shoe option, may mobilise over Rs 30,000 crore in disinvestment receipts, based on the designated floor price for the OFS. This may take the government’s total disinvestment receipts, currently at Rs 21,201 crore, over Rs 50,000 crore.

 

The government aims to raise ₹80,000 crore as miscellaneous capital receipts in FY27, including proceeds from disinvestment and asset monetisation. It has achieved nearly 35 per cent of the target so far this financial year.

 

After meeting its disinvestment receipts target only three times in a decade, the government discontinued the practice of setting a separate disinvestment target from the Interim Budget for FY25. However, the government’s disinvestment programme has gathered pace this year, largely through minority stake sales in public sector undertakings (PSUs).