NEW DELHI: In what could be one of the biggest disinvestment exercises in recent years, the government is set to sell up to 6.5% stake in state-owned insurance giant Life Insurance Corporation of India (LIC) through the offer-for-sale (OFS) route. The floor price has been fixed at Rs 382 a share, a discount of about 10.7% to Monday's closing price of Rs 428.
At the floor price, the government could raise more than Rs 31,000 crore, making it one of the country's largest share sales.
The Department of Investment and Public Asset Management (DIPAM) on Monday said, "The government offers to disinvest 2.5% equity with an additional 4% as a greenshoe option. The floor price has been fixed at Rs 382 per share. This will help achieve minimum public shareholding (MPS) milestones ahead of schedule."
The OFS will open for non-retail investors on Tuesday, while retail investors can bid on Wednesday. The Centre currently holds 96.5% in LIC and, if the entire greenshoe option is exercised, its stake will fall to 90%.
The government has also earmarked 50 lakh shares for eligible LIC employees under a separate employee reservation. Eligible employees can apply for shares worth up to Rs 5 lakh.
At least 10% of the offer has been reserved for retail investors, while 25% of the non-retail portion has been earmarked for mutual funds and insurance companies, subject to valid bids at or above the floor price. The government said it would decide whether to exercise the greenshoe option after the close of trading on the first day of the OFS.
LIC was listed in May 2022 through a Rs 20,500-crore IPO, the largest in India's capital market history. The government had diluted 3.5% stake through the issue, although the original plan was to divest at least 5%.
LIC had earlier received regulatory approval to retain a promoter holding of 96.5%, well above the mandated 75%, for an additional three years. Under the revised timeline, the insurer is required to achieve 10% public shareholding by May 16, 2027. Listed companies are generally required to maintain a minimum 25% public float under public shareholding norms.
The proposed stake sale is expected to provide a much-needed boost to the government's finances. The Centre has budgeted Rs 80,000 crore in disinvestment receipts for FY27 and has so far mobilised about Rs 21,000 crore, largely through the OFS route.
The OFS mechanism enables promoters and existing shareholders to sell their holdings in listed companies without the issuance of fresh equity.