The Indian government has successfully completed an offer for sale (OFS) of a 6.5% stake in Life Insurance Corporation (LIC), raising approximately $3.3 billion. This sale involved an initial 2% stake with an option to divest an additional 4.5%, which was fully exercised due to overwhelming demand from institutional investors. The offer for sale, priced at 382 rupees per share, represented a 10% discount from LIC's closing price on Monday, which was 424 rupees.
Institutional investors showed strong interest, bidding for over 94.45 crore shares, valued at roughly 36,400 crore rupees ($4.3 billion) at an indicative price of 383.84 rupees per share. The institutional portion of the OFS was oversubscribed 3.32 times its base size, prompting the government to utilize the green shoe option to sell the additional shares. Retail investors were set to bid the following day, Wednesday.
This divestment helps the government reduce its 96.5% stake in LIC, moving closer to the regulatory requirement of 75% public shareholding by 2032. The sale will increase LIC's public float to 10% from 3.5%. Despite the success of this large offering, LIC's share price saw a significant decline, falling as much as 8.9% on Tuesday to its lowest in nearly four months, closing at 391 rupees.
The successful stake sale is a significant boost for the Indian government's disinvestment targets, especially as it comes during a period where India's broader IPO market has seen a slowdown. The Department of Investment and Public Asset Management (DIPAM) expressed confidence, stating that the enthusiastic participation reflected robust investor confidence in India's capital markets.
