Government to Sell Up to 6.5% Stake in LIC Through Offer for Sale

The Government of India has announced plans to sell up to a 6.5% stake in Life Insurance Corporation of India (LIC) through an Offer for Sale (OFS), marking its first divestment in the insurer since LIC was listed on the stock exchanges in 2022. The move is expected to raise around ₹31,410 crore at the floor price of ₹382 per share if the entire offer is subscribed.

The stake sale has been planned to help LIC meet the Securities and Exchange Board of India’s (SEBI) minimum public shareholding requirement. At present, public shareholders own only 3.5% of LIC, while regulations require listed companies to maintain a minimum public shareholding of 10%. SEBI has given LIC until 16 May 2027 to comply with this rule.

The OFS will begin with institutional investors before opening to retail investors. The government will first offer a 2% stake, with the option to sell an additional 4.5% if demand remains strong. This flexible approach allows the government to respond to investor interest while gradually increasing LIC’s public float.

LIC remains India’s largest life insurer, serving millions of policyholders across the country. Since its stock market debut in May 2022, the company has remained one of the most closely watched public sector stocks. Increasing the number of publicly traded shares is expected to improve liquidity, attract more institutional investors and enhance trading activity in the stock.

The proposed stake sale is also part of the government’s wider divestment and asset monetisation programme. For the current financial year, the Centre has set a target of ₹80,000 crore through divestment and asset monetisation. It has already raised around ₹21,200 crore through stake sales in companies such as NHPC, Coal India and Indian Railway Finance Corporation.

Market experts believe the sale will be closely watched by both domestic and foreign investors. A successful OFS could improve confidence in public sector companies and encourage wider retail participation in government-backed enterprises. At the same time, increasing the public shareholding may make LIC more attractive for inclusion in global investment portfolios and market indices over time.

The move also reflects the government’s continued focus on strengthening India’s capital markets through greater public participation and improved market liquidity. As more shares become available for trading, investors may benefit from better price discovery and increased market efficiency.

For equity investors, the LIC stake sale is more than just another government divestment. It highlights the importance of regulatory compliance, broader public ownership and deeper capital markets in supporting the long-term growth of India’s financial system.