The Indian government is proceeding with an Offer For Sale (OFS) of up to 6.5% of its stake in Life Insurance Corporation (LIC), aiming to raise approximately $3.3 billion (31,410 crore rupees). This sale includes a base offer of 2.5% and a green shoe option for an additional 4%, which was exercised after strong demand from institutional investors. The floor price for the shares has been set at 382 rupees per share, representing an 11% discount from LIC's previous closing price.
The OFS opened for non-retail investors on Tuesday, August 4th, with retail investors able to participate on Wednesday, August 5th. Institutional investors showed significant interest, oversubscribing their portion 3.32 times and applying for over 94.45 crore shares at an indicative price of 383.84 rupees per share, totaling approximately 36,400 crore rupees. Retail investors are offered a 10 rupee discount to the institutional cut-off price, effectively acquiring shares at 372 rupees if the final price remains at the floor.
This stake sale is crucial for the Indian government to meet minimum public shareholding requirements for LIC, which currently has the government holding 96.5% of the shares. The goal is to reduce this to 75% by 2032, with the current OFS potentially increasing public shareholding to 10%. Following the announcement and discounted pricing, LIC's stock declined nearly 8% to 9% on Tuesday, closing at 391 rupees on the BSE, reflecting the impact of the large volume of shares entering the market rather than a deterioration of the company's fundamentals.
