New Delhi: The Centre has launched its biggest disinvestment move of the current financial year, offering to sell up to 6.5 per cent stake in Life Insurance Corporation of India (LIC) through an Offer for Sale (OFS), a transaction that could fetch the exchequer more than ₹31,000 crore if fully subscribed.
The stake sale is also significant for LIC’s journey as a listed company, as it could raise public ownership in the insurance giant from the present 3.5 per cent to 10 per cent, helping it meet the regulatory public-shareholding requirement ahead of the May 2027 deadline. The government currently holds 96.5 per cent in LIC.
2% Base Offer, 4.5% Green-Shoe Option
Under the OFS structure, the government has put up a 2 per cent stake as the base offer, with an option to sell an additional 4.5 per cent in case of strong investor demand, taking the overall divestment to as much as 6.5 per cent.
The floor price has been fixed at ₹382 per share. At this price, the sale of the entire 6.5 per cent stake could raise around ₹31,400 crore, making it one of the largest government share-sale transactions in recent years.
The OFS opened first for non-retail investors, while retail investors are being given access subsequently under the exchange-based offer mechanism.
LIC OFS: Government to sell 2.5% stake in base issue; 4% in additional greenshoe option.
LIC to raise ₹31,400 crore via OFS.@Sharad9Dubey with more details. pic.twitter.com/6XfmZV1EdI
— NDTV Profit News (@NDTVProfit) August 4, 2026
First LIC Stake Sale Since 2022 IPO
The transaction marks the government’s first further dilution of its holding in LIC since the insurer’s landmark initial public offering in May 2022.
LIC’s IPO had seen the government sell a 3.5 per cent stake, leaving it with a commanding 96.5 per cent holding in India’s largest life insurer.
The latest divestment therefore represents an important second stage in broadening LIC’s public ownership. If the entire 6.5 per cent offer is sold, the government’s stake would fall to around 90 per cent, while public shareholding would rise to 10 per cent.
LIC Shares Slide as OFS Comes at Discount
The announcement triggered sharp pressure on LIC shares on Tuesday. The stock fell as much as 9.26 per cent, touching its lowest level in nearly four months, as investors reacted to the OFS floor price of ₹382 — substantially below the previous closing price of ₹428.50.
However, institutional response to the offer appeared encouraging in the opening hours. Reports indicated that around 66 per cent of the portion reserved for institutional investors had been subscribed by noon, signalling sizeable demand despite the weakness in LIC’s market price.
Big Boost to Government’s Disinvestment Drive
The LIC transaction could provide a major boost to the Centre’s asset-monetisation and disinvestment programme for FY 2026-27.
Official data from the Department of Investment and Public Asset Management (DIPAM) show that the government had already received about ₹20,391 crore from disinvestment transactions during the current financial year before accounting for the LIC sale. Major stake sales have included Coal India, NHPC, General Insurance Corporation, Central Bank of India and Indian Railway Finance Corporation.
According to Reuters, the government is targeting around ₹80,000 crore from disinvestment during the fiscal year. A fully subscribed LIC OFS could therefore contribute substantially towards that goal.
More Public Float, Greater Market Liquidity
Beyond raising funds for the exchequer, the LIC stake sale is expected to substantially increase the number of shares available for public trading.
A higher free float could improve liquidity in the stock, broaden institutional and retail participation and potentially strengthen LIC’s weight in market indices over time.
Despite the proposed dilution, the Centre would continue to retain overwhelming control over LIC. Even after selling the maximum 6.5 per cent stake under the OFS, the government would remain a 90 per cent shareholder in India’s insurance behemoth.
The transaction, therefore, is less about relinquishing control and more about meeting public-shareholding requirements while simultaneously unlocking value from one of the government’s most valuable listed assets.
