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The Central government is reportedly planning to divest 2-3 percent of its stake in Life Insurance Corporation (LIC) during fiscal 2025-26, aligning with regulatory mandates to achieve 10 percent public shareholding by May 2027.
According to sources cited in a Mint report, the divestment will be carried out in small tranches rather than a single large offering. This approach aims to maximize value realization while minimizing potential market disruptions. However, the final execution depends on prevailing market conditions, and officials indicated that the plan could be adjusted if necessary.
LIC Stake Sale: Strategic Move to Meet SEBI Deadline
Currently, the Central government holds a 96.5 percent stake in LIC, following the insurer’s ₹21,000 crore IPO in May 2022, where 3.5 percent equity was offloaded to the public.
A 2-3 percent stake sale at LIC’s current market capitalization of approximately ₹4.8 trillion could fetch the government between ₹9,500 crore and ₹14,500 crore.
LIC was initially expected to comply with the Securities and Exchange Board of India (SEBI) mandate to meet the 10 percent public shareholding rule by May 2024. However, the deadline was extended until May 16, 2027, giving the government additional time for a structured and phased divestment.
LIC Stock Performance and Market Challenges
Since its listing, LIC’s market valuation has declined from ₹5.5 trillion in May 2022 to its current levels, impacted by weak investor sentiment and external market headwinds. On Tuesday, LIC’s shares were trading at ₹754.10 on the BSE.
As the Centre moves ahead with its divestment strategy, analysts believe the staggered approach could help stabilize the insurer’s stock while allowing the government to capitalize on market upswings for better returns.
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