Govt considers shedding up to 5 percent stake in LIC in this fiscal: Report

The government may consider selling up to 5 per cent stake in the state insurer Life Insurance Corporation (LIC) this financial year in order to meet the minimum public shareholding (MPS) norm, Business Line reported.

The government had mopped up ₹21,000 crore in May 2022 via LIC’s initial public offer. The LIC’s IPO was the biggest in the history of the primary markets of India, and comprised entirely of an offer-for-sale by the government (of 221,374,920 equity shares of ₹10 each) at ₹949 apiece, accounting for 3.5 per cent of its paid-up capital.

The government, which owns 96.5 per cent stake in LIC, is considering such options as a follow-on public offer (FPO) and qualified institutions placement (QIP) to dilute a small portion of its stake.

This could fetch higher valuation vis-a-vis the IPO, going by the current stock price.

It is worth remembering that the Department of Economic Affairs, Ministry of Finance, had granted LIC a one-time exemption on Dec 20, 2023, allowing it to achieve 25 per cent MPS within 10 years from the date of listing — till May 2032. That was reportedly done in the public interest.

Following this, the capital markets regulator Sebi on May 14, 2024, granted the Corporation three more years to achieve 10 per cent public shareholding — that is within 5 years from the date of listing (till May 16, 2027).

The Centre will do a piecemeal selling of its holding in order to maximise realisation within the deadlines, a source stated, BL reported.

“While our focus remains primarily on profitable growth in market share, our objective is to create value for all stakeholders... While our total premium growth was stable during the year, going forward, we are planning to intensify our efforts and deploy all necessary resources to enhance our market share,” said Siddhartha Mohanty, CEO & MD of LIC, in a communication to shareholders.