Government Considers Shedding up to 5 Percent Stake in LIC This Fiscal

The Indian government is considering selling up to 5 percent of its stake in the state-owned insurer Life Insurance Corporation (LIC) this financial year to meet the minimum public shareholding norm, as reported by Business Line.

The government had raised ₹21,000 crore through LIC’s initial public offering (IPO) in May 2022, which was the biggest in the history of India’s primary markets.

The government, which owns 96.5 percent stake in LIC, is considering options such as a follow-on public offer (FPO) and qualified institutions placement (QIP) to dilute a small portion of its stake. This could fetch a higher valuation compared to the IPO price, given the current stock price.

Background

The Securities and Exchange Board of India (Sebi) had granted LIC additional time to achieve 10 percent public shareholding within 5 years from the date of listing (till May 16, 2027).

The Centre plans to sell its holding in a piecemeal manner to maximize realization within the deadlines.

LIC’s Performance

LIC’s CEO and MD, Siddhartha Mohanty, stated that the company’s focus remains on profitable growth and market share enhancement.

Despite stable premium growth, LIC plans to intensify efforts and deploy resources to increase its market share.

Conclusion

The government’s stake sale in LIC is aimed at meeting regulatory requirements and unlocking value for stakeholders. LIC’s strong performance and future growth prospects make it an attractive investment opportunity.