LIC Stock Declines Over 4% After Reports Of Government Stake Sale

The stock of Life Insurance Corporation on Wednesday slipped over 4 percent after reports of a government stake sale in the coming months.

The stock opened flat on the bourses at Rs 855.15 apiece, the same level as Tuesday’s closing price, but declined to Rs 819.05 apiece. This was a loss of 4.2 percent compared to the previous closing price.

The decline in the scrip was triggered after Bloomberg reported that the government was planning to sell a 2 percent stake in the state-backed life insurer to institutional investors.

The sale may take place in late June or early July, and the company could raise about Rs 10,000 crore. However, the timing and size of the deal may change as discussions have not finalised the deal contours.

The Department of Investment and Public Asset Management (DIPAM), under the Finance Ministry, is in talks with Goldman Sachs Group Inc, Motilal Oswal Investment Advisors, BNP Paribas, and IIFL Capital Services to manage the transaction, according to the Bloomberg report.

The stake sale is being planned at a time when the Indian stock market is under pressure due to the Iran war, foreign portfolio investors turning net sellers, and a rally in markets like Vietnam and South Korea on the back of artificial intelligence stocks.

Many Indian companies such as PhonePe, Jio, and Kent RO are facing delays in their public listings due to weak market sentiment.

The government currently holds a 96.5 percent stake in LIC. The company got listed on the bourses in May 2022 after the biggest public offering of that time, raising about Rs 21,000 crore.

As per Securities and Exchange Board of India norms, LIC has 10 years from its IPO to raise public shareholding to 25 percent.