LIC Shares Fall 7% As Government Launches Rs 31000 Crore OFS To Sell 6% Stake

The Discount That Triggered The Fall

The Centre has fixed the floor price for the OFS at Rs. 382 a share, a level that works out to roughly 10% below LIC's previous closing price of around Rs. 425 on the BSE.

Under the plan, the government intends to divest up to 6.5% of its holding in LIC, split into a base offer of 2.5% equity with an additional 4% available through a green-shoe option if demand from institutional buyers turns out to be strong.

Bidding opened for non-retail investors, including mutual funds and other institutional players, on Tuesday, with the window for retail investors set to open a day later, on Wednesday.

Department of Investment and Public Asset Management Secretary Arunish Chawla confirmed the structure and timeline in a post on social media platform X.

What The Government Stands To Raise

If the offer sees full participation at the floor price, the sale of over 82 crore shares would fetch the exchequer close to Rs. 31,000 crore, a sum that would meaningfully boost the government's disinvestment collections for the year.

So far in the current financial year, the Centre has raised roughly Rs. 21,000 crore through a combination of stake sales across seven public sector companies and transfers from SUUTI, the erstwhile Unit Trust of India's specified undertaking.

The government currently owns 96.5% of LIC, having sold only a 3.5% stake when the company listed in May 2022 through its IPO, priced in a band of Rs. 902 to Rs. 949 a share and raising close to Rs. 21,000 crore at the time.

LIC currently carries a market capitalization of a little over Rs. 5.36 lakh crore.