India plans to raise up to $3.3 billion by selling a stake in state-run Life Insurance Corporation (LIC), leveraging strong investor demand. The initial offer, comprising a minimum sale of 316.2 million shares (2.5% holding), was valued at 120.8 billion rupees ($1.3 billion) at a floor price of 382 rupees per share. The government exercised an option to sell an additional 4% due to robust demand, potentially increasing the total sale to 6.5% of LIC's equity. This transaction is one of India’s largest offer-for-sale deals and comes as the government seeks to bolster public finances strained by factors such as higher oil prices and a need to buffer citizens from energy price increases.
Prime Minister Narendra Modi’s administration has been actively using share sales in state-run firms as an important revenue source. They had already raised almost $2 billion from such sales in the three months ending June, contributing to their asset sale target of 800 billion rupees for the 2026-27 fiscal year. This recent LIC stake sale, if fully subscribed for the maximum 6.5%, would bring the government's proceeds to approximately $3.30 billion, significantly aiding in achieving their annual divestment target.
Following the announcement of the discounted offer price, LIC shares slumped as much as 9.3% in Mumbai, reaching their lowest in nearly four months before recovering slightly. The floor price of 382 rupees per share represented a discount of almost 11% to the stock's closing price of 428.5 rupees on the previous Monday. The offer is also crucial for LIC to meet its minimum public shareholding requirement of 10% by May 2027. If the full 6.5% is sold, public ownership in LIC would increase from 3.5% to 10%, helping the insurer meet this regulatory deadline ahead of schedule.
