The Government of India has launched its biggest stake sale in Life Insurance Corporation of India (LIC) since the company’s stock market listing in 2022.
The Offer for Sale (OFS) opened for non-retail investors on August 4, while retail investors can place their bids on August 5.
Under the OFS, the government is initially selling a 2% stake, with an option to sell another 4.5%, taking the total offer size to 6.5%.
At present, the government holds a 96.5% stake in LIC.
The announcement also impacted the stock price, with LIC shares falling nearly 9% after the government fixed the OFS floor price at ₹382 per share, lower than the previous closing price of ₹428.
Why Is the Government Selling Its Stake?
The stake sale will help LIC meet the SEBI minimum public shareholding (MPS) requirement.
The market regulator has directed LIC to increase its public shareholding to at least 10% by May 16, 2027, and this OFS is a step toward meeting that target.
10 Key Things Retail Investors Should Know
Retail investors can bid only on August 5
The OFS will be conducted over two trading days.
August 4: Only non-retail investors can participate.
August 5: Retail investors and eligible employees can place bids.
The bidding window will remain open from 9:15 AM to 3:30 PM.
Floor price is ₹382 per share
The government has fixed the floor price at ₹382 per share.
Retail investors can either bid above this price or choose the Cut-Off Price option.
Retail investors get a ₹10 discount
Retail investors and eligible employees will receive a ₹10 discount per share.
The discount will be applied to the final cut-off price decided for the OFS.
You can choose the Cut-Off Price option
If you don’t want to decide your own bid price, you can simply select the Cut-Off Price option.
This is the lowest price at which all the offered shares are successfully sold.
Maximum investment under the retail category is ₹2 lakh
To qualify as a retail investor, your total bid value across all exchanges must not exceed ₹2 lakh.
If the value is higher, your application will not be treated as a retail bid.
10% of shares are reserved for retail investors
At least 10% of the offered shares have been reserved for retail investors.
Additionally, 25% of the offer is reserved for mutual funds and insurance companies.
You can modify or cancel your bid
Retail investors can change or cancel their bids during market hours on August 5, provided the required funds are blocked in the account.
Allotment will be proportionate if demand is high
If more investors apply than the available shares, allotment will be made on a proportionate basis rather than on a first-come, first-served basis.
Full payment is required while applying
Investors must have 100% of the bid amount available in their account when submitting the application.
Shares will be credited on T+2
Successful applicants will receive the shares under the normal T+2 settlement cycle.
If shares are not allotted, the blocked funds will be released after the allocation process is completed.
Should Retail Investors Participate?
The LIC OFS offers retail investors a ₹10 per share discount, along with a dedicated reservation of shares.
However, investors should carefully evaluate the company’s fundamentals, the market conditions, and their own financial goals before making an investment decision.
