Government To Sell 6.5% Stake in LIC, Share Price Rises Amid Plan To Boost Public Holding

New Delhi: The Indian government is preparing to reduce its stake in Life Insurance Corporation of India (LIC) by up to 6.5 percent, according to reports. The sale, estimated to fetch between Rs 8,800 crore and Rs 13,200 crore, could take place by the end of this year .

Sources told The Economic Times that the move aims to increase public shareholding in the company, in compliance with regulatory norms.

LIC Shares Gain on Sale News

Following the news, LIC’s shares witnessed an uptick on Wednesday. The stock opened at Rs 901 and climbed nearly 2 percent to trade at Rs 915 during the session. Investor sentiment turned positive, as the stake sale may improve market liquidity and diversify LIC’s ownership.

SEBI Norms on Minimum Public Shareholding

As per SEBI regulations, every listed company must have at least 10 percent public shareholding. Large public sector enterprises are given a five-year window from listing to meet this threshold.

LIC was listed in May 2022, when the government sold 3.5 percent of its stake through an IPO worth Rs 20,557 crore. Therefore, the government is required to reduce its stake by an additional 6.5 percent by May 2027 to comply with SEBI norms.

Government’s Current Holding and Sale Plan

At present, the government holds 96.5 percent of LIC’s equity. Reports suggest the stake sale may happen in multiple tranches , with the first phase likely by the end of the current quarter. The Department of Investment and Public Asset Management (DIPAM) is overseeing the process.

LIC Shares Still Below IPO Price

Despite the positive market reaction, LIC’s current stock price remains below its IPO issue price of Rs 949 per share. On Tuesday, the stock closed at Rs 900.70, indicating that long-term investors are still under water since the 2022 listing.

However, LIC has received a three-year extension from SEBI to achieve the broader 25 percent public shareholding requirement by May 2032.

Disclaimer: This article is for informational purposes only and not investment advice. Market conditions and government decisions may change; readers should verify details before making financial or investment choices.