The Indian government is considering selling up to a 2% stake in Life Insurance Corporation (LIC) through an offer-for-sale route, potentially in late June or early July. This move is aimed at institutional investors and is contingent on favorable market conditions, according to officials familiar with the matter.
The government needs to offload a 6.5% stake in LIC by May 16, 2027, to meet the mandated 10% public shareholding requirement. The proposed sale would be the first follow-on divestment since LIC's initial public offering in 2022, where a 3.5% stake was sold, raising approximately Rs 21,000 crore. Merchant bankers, including Goldman Sachs and Motilal Oswal Investment Advisors, have been appointed to manage the sale.
The government has set a target of Rs 80,000 crore from asset monetization for the current fiscal year. With the IDBI stake sale not proceeding as planned, the LIC stake sale is expected to contribute towards achieving this target. The timing and size of the sale will depend on market sentiment and investor interest.
LIC has shown strong earnings growth, with a 19.25% rise in profit after tax to Rs 57,419 crore for the year ending March 2026. The insurer's focus on high-margin non-participating products has improved its margins, with the value of new business margin expanding to 21.2% in FY26.
Despite operational improvements, LIC's stock performance has been volatile. After debuting below its issue price in May 2022, the stock saw a recovery in early 2024 but has since fluctuated, closing at Rs 829.90 on the BSE on Wednesday.
Background
The government's divestment strategy has been a key component of its fiscal policy, aiming to raise funds through asset sales to meet budgetary targets. The LIC stake sale is part of broader efforts to increase public shareholding in state-run enterprises.
The government will continue to monitor market conditions to determine the optimal timing for the stake sale. This divestment is crucial for meeting public shareholding requirements and contributing to fiscal targets.
