The Indian government is considering a potential sale of up to 5% of its stake in Life Insurance Corporation (LIC), the state-owned insurance giant, to meet the minimum public shareholding (MPS) norm. This news, reported by Business Line, follows the government’s successful ₹21,000 crore (approximately $2.5 billion) gain from LIC’s initial public offering (IPO) in May 2022. The LIC’s IPO was a historic event, marking the largest in India’s primary market history. The government, currently holding a 96.5% stake in LIC, is exploring options such as a follow-on public offer (FPO) or a qualified institutions placement (QIP) to dilute a portion of its ownership. The current stock price suggests that this move could potentially fetch a higher valuation compared to the initial IPO. It’s important to note that the Department of Economic Affairs, Ministry of Finance, granted LIC a one-time exemption in December 2023, allowing it to achieve a 25% MPS within ten years from its listing date (by May 2032). This exemption was granted in the public interest. Following this, India’s capital markets regulator, SEBI, extended the deadline further by granting LIC an additional three years to reach a 10% public shareholding target—meaning within five years of its listing (by May 16, 2027). A source, speaking to Business Line, revealed the Centre’s strategy to maximize returns by selling its stake piecemeal within these deadlines. Siddhartha Mohanty, LIC’s CEO & MD, communicated to shareholders that while their primary focus remains on profitable market share growth, they aim to create value for all stakeholders. He also highlighted that while the LIC’s total premium growth remained stable in the past year, they plan to intensify their efforts and leverage resources to further enhance their market share.
