MUMBAI: The board of the national insurer Life Insurance Corporation has approved a 1:1 bonus share issue, making it the first-ever such offer since its listing in May 2022, when the government divested just 3.5% of its holding raising Rs 21,003 crore.
The bonus share issue is seen as a precursor to a follow-on public offer.
In an exchange filing late Monday, the Corporation said it will execute the bonus issue by capitalising Rs 6,325 crore of its reserves and surplus of the Corporation available as of December 2025.
A 1:1 bonus share issue means an investor will get an additional share for free for every share she holds as on the record date, which is yet to be decided. This means that the value of each share will be halved upon allocation.
LIC shares, which rallied over 9.32% in the past five sessions upon the news that the Corporation would announce a bonus share on April 13, closed at 809, up 1% on Monday. This means upon allotment, each share will be priced 404.50.
"The board approved the issuance of bonus shares in the proportion of 1:1, that is 1 fully paid up equity share of Rs 10 face each for every 1 fully paid-up equity share held by the members of the Corporation as on the record date," LIC said.
The said bonus issue will be completed on or before June 12.
This is LIC's first bonus issue since listing. The company has declared five interim dividends since its market debut in May 2022.
Companies typically announce bonus issues to improve liquidity, make shares more affordable, and signal confidence in future growth.
Shares of LIC have been under pressure of late, in line with the muted sentiment around the broader market. The stock has declined about 5% since January. However, it is up marginally by 3% in the last one year.
LIC had reported a 17% year-on-year increase in net income in the recent December quarter at Rs 12,930 crore, up from Rs 11,008 crore a year ago. Net premium income stood at Rs 1.26 trillion, up 17% from Rs 1.07 lakh crore a year earlier.