Government Plans Major LIC Stake Sale to Boost Public Shareholding and Raise Funds

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). The move is expected to raise around ₹31,400 crore, making it one of the country’s largest share sales in recent years. The government currently owns the majority of LIC and is selling part of its holding to increase public participation in the company.

The share sale is aimed at helping LIC meet the Securities and Exchange Board of India’s (SEBI) requirement of maintaining at least 10% public shareholding by May 2027. At present, only about 3.5% of LIC’s shares are held by public investors, which is below the minimum requirement for listed companies.

The OFS will be carried out in two stages. Institutional investors will be able to bid first, followed by retail investors. The government has fixed a floor price of ₹382 per share, allowing investors to purchase LIC shares through the stock market during the offer period.

LIC was listed on the stock exchanges in May 2022 through India’s biggest-ever initial public offering (IPO). Since then, the insurer has remained one of the country’s most closely watched public sector companies because of its large customer base, significant investment portfolio and strong presence in the insurance industry.

The stake sale is also part of the government’s wider disinvestment programme for the current financial year. The Centre aims to raise around ₹80,000 crore through the sale of stakes in public sector companies. Funds generated through these sales are expected to support government spending on infrastructure, public services and fiscal management.

Market experts believe the increased public shareholding could improve liquidity in LIC’s stock, making it easier for investors to buy and sell shares. A larger public float may also encourage greater participation from domestic and international institutional investors over time.

The announcement comes at a time when India’s equity markets continue to attract strong investor interest despite global economic uncertainty. Analysts say the success of the LIC stake sale could strengthen confidence in future government disinvestment programmes and create additional opportunities for retail investors to participate in large public sector companies.

For existing shareholders, the OFS represents an opportunity to see broader market participation in LIC. For new investors, it provides another chance to invest in India’s largest life insurer through the stock market. The outcome of the sale will be closely watched as it could influence future government stake sales and India’s broader capital market reforms.