New Delhi: The Government of India’s ambitious stake sale in Life Insurance Corporation of India (LIC) has received an overwhelming response from institutional investors, prompting the Centre to exercise the entire greenshoe option and increase the Offer for Sale (OFS) to 6.54% of LIC’s equity capital.
On the opening day of the institutional bidding, investors placed bids worth nearly ₹36,400 crore, making it one of the most successful institutional Offer for Sale (OFS) issues since the mechanism was introduced. The strong response is expected to significantly strengthen the Centre’s disinvestment receipts for FY2026-27 while helping LIC meet the prescribed Minimum Public Shareholding (MPS) norms well ahead of schedule.
Centre Expands OFS Following Robust Institutional Demand
The OFS was initially launched with a base offer of 2.5% equity, accompanied by a greenshoe option of an additional 4.04% stake to be exercised depending on investor demand.
Following the overwhelming response from institutional investors, the Government decided to fully exercise the greenshoe option, taking the total offer size to 82.22 crore shares, equivalent to 6.54% of LIC’s paid-up equity capital.
Institutional investors bid for more than 94.45 crore shares at an indicative price of ₹383.84 per share, translating into bids worth approximately ₹36,400 crore.
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Government Aims to Raise Over ₹31,600 Crore
Through the expanded OFS, the Government expects to raise more than ₹31,600 crore, making it one of the largest disinvestment exercises undertaken in recent years.
The Department of Investment and Public Asset Management (DIPAM) had fixed the floor price at ₹382 per share, representing nearly a 3% discount to LIC’s previous closing price of ₹391.30 on the NSE.
The government has reserved 10% of the offer for retail investors, while both retail investors and eligible employees are entitled to a ₹10 per share discount on the final cut-off price.
The retail portion of the OFS opened on August 5, allowing investors to place bids through the dedicated OFS windows on the NSE and BSE.
Institutional Portion Oversubscribed More Than Three Times
Commenting on the response, Arunish Chawla (IAS:1992:BH), Secretary, Department of Investment and Public Asset Management (DIPAM), said the institutional portion of the OFS was subscribed 3.32 times the base issue size.
According to him, the enthusiastic participation reflects robust investor confidence in LIC as well as the depth and resilience of India’s capital markets despite recent market volatility.
The strong subscription came even as LIC’s share price witnessed a sharp decline during the trading session.
Stake Sale to Help Meet Public Shareholding Norms
Apart from mobilising resources through disinvestment, the stake sale is aimed at helping LIC comply with the Minimum Public Shareholding (MPS) norms prescribed for listed companies.
The Government currently remains the dominant shareholder in LIC, and the expanded OFS is expected to improve public shareholding while maintaining majority government ownership.
LIC Reshuffles ₹16.30 Lakh Crore Equity Portfolio
The stake sale comes at a time when LIC has also undertaken a significant reshuffle of its investment portfolio.
During the June quarter, the country’s largest domestic institutional investor, managing an equity portfolio worth approximately ₹16.30 lakh crore, purchased shares worth an estimated ₹16,578 crore while selling stocks valued at over ₹13,400 crore across various companies.
The portfolio rebalancing reflects LIC’s active investment strategy amid changing market conditions.
Analysts See Attractive Long-Term Opportunity
Market experts believe the OFS presents an attractive opportunity for long-term investors.
According to Ajit Mishra, Senior Vice President (Research), Religare Broking, the effective retail acquisition price of around ₹372 per share, after the ₹10 discount, values LIC at nearly 0.3 times its FY26 Embedded Value, significantly below listed private life insurance companies.
He noted that LIC’s financial performance has also improved considerably, with:
- Value of New Business (VNB) margin rising to 21.2% in FY26.
- Solvency ratio improving to 2.35 times, indicating a stronger capital position.
While policy persistence remains an area to monitor, analysts believe LIC’s improving profitability, dominant market position and attractive valuation make the OFS appealing for long-term investors.
Major Boost to FY27 Disinvestment Programme
The overwhelming institutional response has provided a strong start to the Government’s disinvestment programme for FY2026-27.
With the expanded stake sale expected to mobilise over ₹31,600 crore, the LIC OFS is likely to become one of the largest and most successful government divestment exercises in recent years, while simultaneously strengthening public participation in India’s largest life insurer.
About LIC of India
The Life Insurance Corporation of India (LIC) is a statutory corporation established under the LIC Act of 1956. It is India’s largest insurance company and the largest institutional investor. LIC’s primary goal is to provide life insurance and financial security to individuals, with a focus on spreading insurance widely, especially in rural areas.
