Government to Sell 6.5% Stake in LIC, Aims for ₹31,000 Crore Boost

The government is set to sell up to a 6.5% stake in Life Insurance Corporation (LIC) through a two-day offer for sale (OFS) starting today, August 4, 2026. The floor price for the sale has been fixed at ₹382 per share, representing a 10% discount to LIC's Monday closing price of ₹424.35 on the BSE. Non-retail investors will have access to the issue today, while retail investors can participate tomorrow, August 5. If fully subscribed, the sale of over 82.22 crore shares is expected to generate approximately ₹31,000 crore for the government's disinvestment fund.

Accelerating Sebi Compliance

The sale includes an initial disinvestment of 2.5% equity, with an additional 4% offered as a green shoe option, according to Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM). This move is aimed at helping LIC meet the Securities and Exchange Board of India's (Sebi) minimum public shareholding requirement of 10% ahead of the May 16, 2027 deadline. Currently, the government holds a 96.5% stake in LIC, following an earlier 3.5% stake sale via an IPO in May 2022, which raised ₹21,000 crore at a price band of ₹902-949 per share.

Significant Fiscal Contribution

The ₹31,000 crore expected from this stake sale will add to the government’s disinvestment target for the ongoing fiscal year. As of now, ₹21,082 crore has already been raised through stake sales in seven public sector undertakings and remittances from the Specified Undertaking of the Unit Trust of India (SUUTI). The LIC sale could significantly bolster the government’s fiscal resources.

LIC’s Market Standing

LIC, a cornerstone of India's financial sector, currently boasts a market capitalisation exceeding ₹5.36 lakh crore. Its shares closed slightly lower on Monday, down 0.12% at ₹424.35 on the BSE. The discounted floor price of ₹382 per share for the OFS is expected to attract strong investor interest, especially given LIC’s prominent role in the Indian economy.

This strategic disinvestment marks another step in the government’s efforts to meet its fiscal targets while ensuring compliance with regulatory requirements.

Source: The Hindu