Institutional investors over subscribe LIC OFS, bid ₹36,400 crore, retail offer in 6.5% stake sale begins tomorrow

Institutional investors participating in the government's 6.5% disinvestment in the Life Insurance Corporation of India (LIC), over-subscribed to the offer for sale (OFS) today, on 4 August (Tuesday), bidding ₹36,400 crore.

In a post on social media platform X (formerly known as Twitter), the Department of Investment and Public Asset Management (DIPAM), stated: “Offer for Sale in the Life Insurance Corporation of India (LIC) received an overwhelming response from the institutional investors and was over-subscribed 3.32 times of its base size.”

“This enthusiastic participation reflects robust investor confidence and the depth of India's capital markets. In view of the exceptional demand, the government has decided to exercise the green shoe option. Retail investors get to bid tomorrow. Make the most of this opportunity!” it declared.

Notably, this move comes four years after the insurance behemoth's initial public offering (IPO), fetched ₹21,000 crore for the Centre, as per a PTI report.

Institutional investors bids for over 94.45 crore shares

Institutional investors participating in the LIC OFS put in bids for more than 94.45 crore shares, at an indicative price of ₹383.84/share. At the indicative price, the bids are valued at ₹36,400 crore in total, the report added.

Shares of LIC slid 7.86% to close at ₹391 on the BSE. Its market capitalisation stands at ₹4.95 lakh crore.

LIC's offer for sale: What we know

• The government has launched LIC's offer for sale (OFS) whose size compares with the upcoming mega IPO offerings of the NSE and Reliance Jio Platforms.
• Through the two-day OFS, the government is selling up to 6.5% stake or over 82.22 crore equity shares in the country's largest insurance provider LIC, at a floor price of ₹382 per share.
• The floor price of ₹382/share was set at a 10% discount over Monday's closing price of ₹424.35 on the BSE.
• The issue comprises a base offer size of 2.5%, with a green shoe option of 4%. “This will help achieve minimum public shareholding (MPS) milestones ahead of schedule,” the DIPAM said in another post on X yesterday (3 August).

• The issue will open for retail investors tomorrow on Wednesday, 5 August 2025.

What is Green-shoe Option?

An “over-allotment” provision, the green shoe option allows a company to raise more funds than initially planned, by issuing additional securities. It is triggered in case of strong investor demand for the stock.

Overall, the provision helps ensure that a company can efficiently manage oversubscription during listing and maintain better price and liquidity stability.

For investors this means more shares on offer and can also thus reduce share price surge or stock price volatility in case of extremes (low or high demand).

Govt set to add ₹31,000 crore to disinvestment purse

At the floor price, the sale of over 82.22 crore shares or a 6.5% stake, is expected fetch about ₹31,000 crore to the Centre's disinvestment kitty, as per the PTI report.

The stake sale will help LIC achieve the MPS requirement mandated by market regulator, the Securities and Exchange Board of India (SEBI) ahead of its 16 May 2027 deadline.

SEBI had given the insurance company time to achieve a minimum 10% public shareholding. At present, the government holds a 96.5% stake in LIC.

LIC disinvestment ongoing process

Notably, the central government had earlier sold 3.5% in LIC through an IPO in May 2022 at a price band of ₹902-949 per share, raising about ₹21,000 crore, the report added. In April 2026, the LIC board approved a 1:1 bonus issue.

In this fiscal, the central government has so far mopped up ₹21,082 crore through stake sale in seven public sector undertakings (PSUs) and remittances from Specified Undertaking of the Unit Trust of India (SUUTI).

(With inputs from PTI)