LIC OFS: Non-retail Segment Fully Subscribed; Greenshoe Option Expected to Be Activated

Shares of Life Insurance Corporation of India Ltd. (LIC) dropped by as much as 8.5% on Tuesday, August 4, following the government’s Offer for Sale (OFS) announcement on Monday evening, which opened for subscription to non-retail investors.

As of 2:30 PM on Tuesday, the OFS had been subscribed to 120% of the total shares available, according to BSE data.

The government announced on Monday (August 3) its plan to sell up to a 6.5% stake through an Offer for Sale (OFS) at a minimum price of ₹382 per share, starting Tuesday (August 4).

This floor price represents a 10% discount compared to Monday’s closing price of LIC shares, which was ₹424.35 on the BSE. LIC indicated that its trading window will remain closed until August 8, 2026.

If fully subscribed, the sale of over 82.22 crore shares, or a 6.5% stake at this floor price, could generate approximately ₹31,000 crore for the disinvestment fund.

The Department of Investment and Public Asset Management (DIPAM) specified that the OFS includes a base offer of 2.5% of LIC’s equity, in addition to a 4% green shoe option in case of oversubscription.

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The OFS opened for non-retail investors on Tuesday, while retail investors can participate on Wednesday. DIPAM Secretary Arunish Chawla stated that the stake sale will assist the government in reaching minimum public shareholding (MPS) goals ahead of schedule.

Previously, 3.5% was sold through an initial public offering (IPO) in May 2022, with a price band of ₹902-949 per share, raising about ₹21,000 crore. LIC now holds a market capitalization exceeding ₹5.36 lakh crore. On Monday, LIC shares closed at ₹424.35, down 0.12% from the previous closing price on BSE.

In this fiscal year to date, the government has raised ₹21,082 crore from stake sales in seven public sector undertakings and remittances from SUUTI (Specified Undertaking of the Unit Trust of India).

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The Government of India presently owns a 96.5% stake in Life Insurance Corporation of India (LIC). After the OFS, the stake is projected to decrease to 90%.

The Securities and Exchange Board of India (SEBI) has granted LIC until May 2027 to reduce the government’s stake to 90% in order to meet the minimum public shareholding (MPS) requirement.

This proposed stake sale is part of the government’s ongoing disinvestment program designed to generate resources through OFSs in public sector undertakings (PSUs).

Recent OFSs by the government have experienced strong participation from both institutional and retail investors. Most of these offers were made at attractive discounts compared to the prior day’s closing price, resulting in significant demand.

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Following the announcement, LIC shares opened 8.5% lower on Tuesday, falling to ₹392. The stock has decreased by 8% year-to-date.