India to Sell 6.5% LIC Stake, Aiming for ₹31,400 Crore
By Business Desk
Indian government plans to divest up to 6.5% of its stake in LIC via Offer for Sale, targeting ₹31,400 crore. Learn about the details and implications.
The Indian government is set to offload up to a 6.5% stake in Life Insurance Corporation (LIC) via an Offer for Sale (OFS) route. This strategic move aims to generate approximately Rs 31,400 crore, equivalent to about $3.7 billion.
The OFS is structured with a base offer of 2.5% and includes a green shoe option for an additional 4%. Non-retail investors could participate starting Tuesday, while the offer for retail investors concludes on Wednesday.
Key Offer Details
- Total Stake Offered: Up to 6.5%
- Targeted Proceeds: Approximately Rs 31,400 crore ($3.7 billion)
- Share Price: Rs 382 each
- Discount Offered: 10% compared to LIC’s Monday closing price of Rs 424 on BSE
This divestment is crucial for LIC to align with the Securities and Exchange Board of India’s (SEBI) Minimum Public Shareholding (MPS) norm. The sale will increase public ownership from its current 3.5% to 10% ahead of the regulatory schedule.
Meeting Regulatory Mandates
Should the offer be fully subscribed, it would represent India’s largest OFS for disinvestment to date. This action brings LIC closer to the mandated public float requirements set by SEBI.
- Current Public Shareholding: 3.5%
- Target Public Shareholding: 10%
The proceeds from this stake sale, combined with a previous 1:1 bonus offer and other asset monetization efforts, are expected to significantly boost the government’s disinvestment kitty. This collective push aims to reach approximately Rs 60,000 crore, moving closer to its annual target of Rs 80,000 crore.
Broader Fiscal Implications
This financial injection will aid the government in managing additional expenses, such as subsidies for fuel and fertilizers. Crucially, it also supports the government’s objective of maintaining its fiscal deficit target at 4.3% of GDP.