The Government of India’s Offer for Sale (OFS) in Life Insurance Corporation of India (LIC) received an overwhelming response from institutional investors on the first day of bidding, with the issue being subscribed 3.32 times its base offer. Following the robust demand, the Centre has decided to exercise the green shoe option, increasing the size of the stake sale.
The announcement was made by Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla, who confirmed that the strong institutional participation prompted the government to expand the offer.
Strong Institutional Participation Boosts LIC OFS
The LIC OFS opened on August 4, 2026, exclusively for non-retail investors, while retail investors and eligible employees can bid on August 5. The government had initially offered a 2.5% stake, with an additional 4% available under the green shoe option, taking the total potential divestment to 6.5%.
The OFS has been priced at a floor price of ₹382 per share, representing a discount to the previous market price to attract investor participation.
Green Shoe Option Fully Activated
After the non-retail portion was subscribed 3.32 times its base size, the government exercised the green shoe option, allowing it to sell additional shares beyond the initial offer. This move could significantly increase the proceeds from the disinvestment programme.
If the entire 6.5% stake is sold, the government is expected to raise over ₹31,000 crore, making it one of India’s largest equity stake sales.
Public Shareholding Target
The stake sale is aimed at helping LIC comply with SEBI’s minimum public shareholding (MPS) requirement. The government currently holds about 96.5% in LIC, and the OFS will help increase the public float to the mandated level ahead of the May 2027 deadline.
Market Reaction
LIC shares declined sharply after the discounted OFS announcement, reflecting pricing adjustments ahead of the share sale. However, analysts believe the higher free float could improve liquidity and attract greater institutional participation over the long term.
The retail portion of the OFS is scheduled to open on August 5, where investor response will determine the final size of the government’s stake sale.
