The government’s offer for sale (OFS) in Life Insurance Corporation of India (LIC) received a strong response from investors, with the issue getting subscribed more than twice by the time bidding closed on Wednesday. The Centre ultimately sold 82.22 crore shares, representing a 6.5% stake in the country’s largest insurance company.
The LIC OFS helped the government raise around ₹31,552 crore, making it one of the biggest equity stake sales in India. Strong demand, particularly from institutional investors, allowed the government to exercise the greenshoe option and expand the size of the transaction beyond the initial 2.5% stake on offer.
The final offering included a base issue of around 31.62 crore shares and an additional 50.59 crore shares through the oversubscription or greenshoe option. Overall, investors placed bids for about 187.15 crore shares, resulting in subscription of roughly 2.27 times the shares offered.
The government had fixed the floor price for the LIC OFS at ₹382 per share. This represented a significant discount to LIC’s market price before the stake sale was announced and was intended to make the offering attractive to investors.
The non-retail category received particularly strong interest. The segment, which covered about 74 crore shares, received bids for nearly 129.48 crore shares and was subscribed around 1.57 times based on the initial clearing calculations. The final allotment price was subsequently fixed at ₹383.69 per share, slightly above the floor price.
Retail investors, however, showed a more cautious response. The retail portion consisted of about 8.22 crore shares, against which bids were received for around 5.76 crore shares. This translated into subscription of roughly 70%. Retail investors were offered an additional discount, with the applicable price set ₹10 below the non-retail clearing price.
The contrasting response from institutional and retail investors highlights an important feature of the LIC share sale. While large investors appeared comfortable taking exposure to the stock at a discounted valuation, individual investors were more measured, even with the additional price benefit.
The OFS was initially planned as a sale of 2.5% of LIC by the government. However, the Centre had retained the option to sell another 4% through the greenshoe mechanism if demand was strong. The government eventually used the option in full, taking the total stake sold to 6.5%.
The transaction also has a larger significance for LIC’s shareholding structure. Before the OFS, the government owned around 96.5% of the insurer. Following the sale, its holding has come down to about 90%, while public shareholding in LIC has risen to 10%. This meets an important minimum public shareholding milestone ahead of schedule.
For the government, the LIC OFS is not merely a fund-raising exercise. It is also part of its broader disinvestment and asset-monetisation strategy. The successful completion of the transaction gives the Centre greater flexibility in managing its remaining stake in LIC while increasing the proportion of shares available to public investors.
LIC’s journey in the capital market began with its blockbuster initial public offering in May 2022. The ₹20,500-crore IPO was the largest public issue in India at the time. The government had sold a 3.5% stake through that IPO, although the original plan had been to dilute a larger portion.
The latest OFS therefore marks another major step in the government’s efforts to broaden LIC’s public ownership. It also increases the stock’s free float, potentially improving liquidity and participation in the market over time.
For LIC, the stake sale comes at a time when investors are closely watching the insurer’s financial performance, growth prospects and ability to compete in an increasingly competitive insurance market. The company remains one of India’s most recognisable financial brands, with a vast customer base and a dominant position in the life insurance sector.
The immediate market reaction, however, could remain sensitive to the additional supply of LIC shares entering the public market. A large OFS can create short-term pressure on a stock as investors adjust to the increased supply. LIC shares had already come under pressure after the government announced the discounted stake sale.
At the same time, the strong institutional participation provides a measure of confidence in the offering. The government’s ability to sell the full 6.5% stake and raise more than ₹31,500 crore indicates that investors were willing to absorb a substantial block of LIC shares at the offered valuation.