Massive LIC Stake Sale
Government to sell 6.5% LIC stake at discounted price, targeting Rs 31,000 crore.
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Key Points
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The OFS would cover about 82.22 crore LIC shares, equating to the full 6.5% stake on offer; if subscribed, it could raise around Rs 31,000 crore.
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About 50 lakh LIC shares have been earmarked for eligible LIC employees under a separate employee reservation, with eligible employees able to bid for shares worth up to Rs 5 lakh.
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LIC's 3.5% stake had previously been diluted through the May 2022 IPO, which raised roughly Rs 21,000 crore.
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In the current financial year, the government has already mopped up about Rs 21,082 crore through stake sales in seven PSUs and SUUTI remittances, illustrating the pace of disinvestment this year.
The Indian government is set to sell up to 6.5% of Life Insurance Corporation (LIC) through an offer for sale (OFS), with a floor price of Rs 382 per share, according to Inshorts. The deal could raise around Rs 31,000 crore, making it one of the biggest disinvestment moves of the year.
The OFS opened for non-retail investors on Tuesday and will open for retail investors on Wednesday, The Live Nagpur reported. The government currently holds 96.5% of LIC and wants to cut that stake to meet stock market rules on public ownership.
What the 6.5% Stake Sale Actually Means
The sale covers about 82.22 crore LIC shares, according to Pratidin Time. The base offer is 2.5% of LIC's equity. The government has also added a greenshoe option — a tool that lets it sell up to 4% more if demand is strong. If both are fully used, the government's stake falls from 96.5% to roughly 90%.
The floor price of Rs 382 per share is about 10% below LIC's recent trading price, The Live Nagpur noted. LIC's total market value sits above Rs 5.36 lakh crore. That makes LIC one of India's largest companies by market cap.
SEBI Deadline Pushing the Government to Act Now
Indian market regulator SEBI requires all listed companies to have at least 25% of their shares held by the public. LIC listed on the stock exchange in May 2022 via an IPO that raised about Rs 21,000 crore, according to Pratidin Time. That IPO diluted 3.5% of the government's stake — but the public float is still far below the 25% rule.
The government has a deadline of 2027 to meet the SEBI norm, Whalesbook reported. This OFS is designed to push LIC closer to that target well ahead of the cutoff. Selling now also locks in a large chunk of cash for the government.
LIC Employees Get a Slice of the Offer
About 50 lakh LIC shares have been set aside for eligible LIC employees under a separate reservation, according to The Live Nagpur. Each eligible employee can bid for shares worth up to Rs 5 lakh. This gives workers a direct stake in the company they help run.
India's Disinvestment Drive Already Collecting Big Numbers
This OFS comes as India's disinvestment push gains pace. So far this financial year, the government has already raised about Rs 21,082 crore through stake sales in seven public sector companies and remittances from SUUTI, Pratidin Time reported.
If the LIC OFS hits its full target of Rs 31,000 crore, total disinvestment receipts for the year would cross Rs 52,000 crore. That would be a major boost to government finances, helping fund spending without raising taxes or borrowing more.
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