Shares of Life Insurance Corporation of India (LIC) came under heavy selling pressure on Tuesday after the government initiated an offer for sale (OFS) to reduce its holding in the state-owned insurer.
The stock fell over 7% in early trade as investors reacted to the discounted floor price and the possibility of increased share supply.
LIC shares were trading around ₹394, down 7%. The stock has declined about 6.5% so far in 2026, broadly in line with the 6% fall in the benchmark Nifty 50. At the current market price, LIC’s market capitalisation stood at nearly ₹5.05 lakh crore.
The government’s OFS includes a base offer of 2.5% of LIC’s paid-up equity share capital, along with an additional 4% greenshoe option. If the entire offer is subscribed and the greenshoe option is exercised, the Centre could sell up to 6.5% stake in the insurer and raise around ₹31,000 crore.
The floor price for the OFS has been fixed at ₹382 per share, which is around 11% lower than LIC’s previous closing price. The discounted pricing and additional supply of shares triggered selling pressure, with LIC stock trading only slightly above the OFS floor price during early trade.
The OFS opened for institutional investors on August 4, while retail investors will be allowed to participate on August 5. Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla confirmed that the base issue would account for 2.5% equity, with the remaining portion available through the greenshoe option.
The stake sale is part of the government’s efforts to increase LIC’s public shareholding and comply with SEBI’s minimum public shareholding requirements. Currently, the government owns 96.5% of LIC, while public shareholders hold the remaining 3.5%.
SEBI has provided LIC time until May 2027 to bring down government ownership to 90%. If the full 6.5% stake sale is completed, the government’s holding would reduce to around 90%.
