LIC Stake Sale Increased to 6.5% by Indian Government
By Business Desk
India’s government expands LIC stake sale to 6.5% via greenshoe option, aiming to reach 10% public ownership and raise billions. Market reacts.
The Union government is selling more shares in Life Insurance Corp. (LIC). It will use a greenshoe option to offload an additional 4% stake, meaning selling extra shares if demand is high.
This move increases the total stake offered through the ongoing offer for sale (OFS) to 6.5%. An OFS is simply a way for a company’s promoters to sell shares to the public. The goal is to boost LIC’s public shareholding and meet regulatory rules.
- Current government holding in LIC: about 96.5%
- Current public shareholding: 3.5%
- Total stake now offered in OFS: 6.5%
- Target public shareholding if fully sold: 10%
- OFS floor price: ₹382 per share
- LIC’s last closing price: ₹428.50
- Estimated transaction value for 6.5% stake: between ₹31,000 crore and ₹35,000 crore
Market Reacts to Increased Sale
Following this announcement, LIC shares dropped significantly on Tuesday. They fell by up to 9.26%, hitting their lowest point in nearly four months.
This marks the first government divestment in LIC since its initial public offering (IPO) in May 2022. During that IPO, the Centre sold a 3.5% stake and raised around ₹21,000 crore.
Why the Government is Selling More
This stake sale helps the government reach its larger disinvestment program target for FY27, which is ₹80,000 crore. Disinvestment means the government selling its assets. The LIC transaction is expected to boost the Centre’s asset-sale money.
It also aims to improve LIC’s market liquidity, making its shares easier to trade. Plus, it broadens the base of public investors owning the insurer.