The Government of India has announced an Offer for Sale (OFS) in Life Insurance Corporation of India (LIC), proposing to divest an initial 2.5% stake with an additional 4% greenshoe option, taking the total potential stake sale to 6.5%. The move is aimed at increasing public shareholding and meeting regulatory norms ahead of schedule.
The OFS will open for non-retail investors on August 4, while retail investors and eligible employees can place bids on August 5. The floor price has been fixed at ₹382 per share, representing a discount to LIC’s latest market price.
Government Seeks to Meet Public Shareholding Norms
According to the Department of Investment and Public Asset Management (DIPAM), the government currently owns 96.5% of LIC. If the entire 6.5% stake is sold through the base offer and greenshoe option, the government’s holding will reduce to 90%, enabling LIC to meet the minimum public shareholding milestone well before the regulatory deadline of May 2027.
The disinvestment is part of the Centre’s broader strategy to improve market liquidity, widen retail participation, and advance its public sector divestment programme.
Potential to Raise Around ₹31,000 Crore
Based on the floor price of ₹382 per share, analysts estimate that the government could mobilize around ₹31,000 crore if the entire 6.5% stake, including the greenshoe option, is subscribed. This would make it one of the largest OFS transactions in the Indian equity market.
Key Highlights
- Government to sell 2.5% stake in LIC through OFS.
- Additional 4% greenshoe option may increase the total divestment to 6.5%.
- Floor price: ₹382 per share.
- Non-retail bidding: August 4.
- Retail bidding: August 5.
- Government stake could reduce from 96.5% to 90%, helping LIC meet SEBI’s minimum public shareholding requirement ahead of schedule.
Market Impact
The OFS is expected to attract strong participation from institutional investors due to LIC’s position as India’s largest insurer. However, the discounted offer price may create short-term pressure on the stock while improving liquidity and free float over the longer term. Investors will closely watch subscription levels and demand from institutional buyers during the bidding process.
Source: Department of Investment and Public Asset Management (DIPAM)
