According to Business-Today, the government's stake sale in Life Insurance Corporation (LIC) drew heavy participation from institutional investors in the first leg of its Offer-for-Sale (OFS), with 66.10% of the institutional portion subscribed by noon on Tuesday. Data available until midday showed institutional investors had bid for more than 18.81 crore shares at an indicative price of Rs 382.07 per share, slightly above the floor price of Rs 382 fixed for the issue.
Offer structure and pricing
Business-Today reported that the Centre is divesting up to 6.5% of its holding in LIC through the OFS, offering more than 82.22 crore shares. Of these, over 28.46 crore shares have been earmarked for institutional investors. The transaction consists of a base issue of more than 31.62 crore shares, equivalent to 2.5% of the insurer's total capital, along with a green shoe option of 50.60 crore shares, or 4% of the paid-up capital.
The institutional window remains open until 3.30 pm on Tuesday, while retail investors get the opportunity to participate on Wednesday, according to Business-Today.
| Metric | Value |
|---|---|
| Institutional subscription by noon | 66.10% (18.81 crore shares) |
| Indicative bid price | Rs 382.07 per share |
| Floor price | Rs 382 per share |
| LIC BSE closing price (Monday) | Rs 424.35 |
| Discount to closing price | 10% |
| Stake on offer | Up to 6.5% (82.22 crore shares) |
| Institutional portion | 28.46 crore shares |
| Base issue | 31.62 crore shares (2.5% of total capital) |
| Green shoe option | 50.60 crore shares (4% of paid-up capital) |
| Potential proceeds at floor price | Around Rs 31,000 crore |
| LIC share price (Tuesday afternoon) | Rs 394.50 (-7.03%) |
| Market capitalisation | More than Rs 4.98 lakh crore |
| Government holding | 96.5% |
Regulatory context
At the floor price, a fully subscribed offer would bring in around Rs 31,000 crore for the government's disinvestment kitty.
The floor price represents a 10% discount to LIC's BSE closing price of Rs 424.35 on Monday, Business-Today reported. The sale is also expected to help LIC comply with Sebi's minimum public shareholding requirement ahead of the deadline; the regulator allowed the insurer until May 16, 2027 to increase its public shareholding to at least 10%.
Market reaction
LIC shares declined during Tuesday's trading session, slipping 7.03% from Monday's close to Rs 394.50 on the BSE in afternoon trade, Business-Today reported. The insurer's market capitalisation stood at more than Rs 4.98 lakh crore. The government currently holds a 96.5% stake in LIC; it last diluted its holding in May 2022, when it sold a 3.5% stake through the insurer's initial public offering at a price band of Rs 902-949 per share, raising about Rs 21,000 crore. In April, LIC's board approved a 1:1 bonus issue.
Disinvestment and capital-flow context
Business-Today reported that with this transaction, the government continues to add to its disinvestment receipts. So far in the current financial year, it has mobilised Rs 21,082 crore through stake sales in seven public sector undertakings and remittances from SUUTI (Specified Undertaking of the Unit Trust of India).
For CFOs, treasury directors and investors tracking emerging-market capital flows, the OFS is a sizeable equity supply event: at the floor price, a fully subscribed offer would bring in about Rs 31,000 crore for the government's disinvestment kitty. With the floor price set at a 10% discount to Monday's close and LIC shares trading 7.03% lower on Tuesday afternoon, the 66.10% institutional subscription by noon indicates active demand from large investors. The institutional window closes at 3.30 pm Tuesday, with retail participation scheduled for Wednesday.
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