Institutional Investors Surge in LIC OFS, Piling Up Rs 36,400 Crore Bids for Government Stake Sale

Institutional Investors Surge in LIC OFS, Piling Up Rs 36,400 Crore Bids for Government Stake Sale​

Massive Institutional Interest Propels LIC Offer For Sale​

Institutional investors demonstrated significant appetite for Life Insurance Corporation (LIC) shares on Tuesday. They placed bids totaling Rs 36,400 crore in the government's Offer For Sale (OFS). This strong institutional backing comes ahead of the issue opening to retail investors on Wednesday.

The OFS involves the sale of up to 6.5 per cent stake—equivalent to over 82.22 crore shares—in India's largest insurer. The floor price for the shares has been set at Rs 382/share.

Details of the LIC Stake Sale Offer​

This disinvestment initiative is a significant undertaking, with the scale comparable to upcoming mega IPO offerings from NSE and Reliance Jio Platforms. While the base offer size stands at 2.5 per cent, there is a green shoe option amounting to an additional 4 per cent stake.

The floor price of Rs 382/share was carefully set as a 10 per cent discount over Monday's closing market price of Rs 424.35 on the BSE. At the stated floor price, selling all 6.5 per cent would generate approximately Rs 31,000 crore for the disinvestment kitty.

Fulfilling SEBI Mandate and Stakeholding Requirement​

The stake sale is crucial for LIC to meet regulatory requirements ahead of schedule. The market regulator, SEBI, had previously granted LIC until May 16, 2027, to achieve a minimum 10 per cent public shareholding. Currently, the government maintains a 96.5 per cent stake in the corporation.

The OFS contributes directly to reducing this government holding. This move allows LIC to proactively address its public shareholding mandate.

Background of LIC's Disinvestment Journey​

This current OFS follows previous successful capital raises by the insurer. In May 2022, the government sold a 3.5 per cent stake through an Initial Public Offering (IPO), which successfully raised around Rs 21,000 crore.

Adding to its history of corporate action, the LIC board had approved a 1:1 bonus issue in April 2026. In the current fiscal year alone, the government has managed to raise Rs 21,082 crore through stake sales across seven public sector undertakings and remittances from SUUTI (Specified Undertaking of the Unit Trust of India).

Share Performance and Market Context​

Shares of LIC saw a downturn on Tuesday, sliding 7.86 per cent in trading. The stock closed at Rs 391 on the BSE. Currently, the company boasts a market capitalization of Rs 4.95 lakh crore.

The strong institutional bidding, however, indicates confidence among major financial institutions ahead of the retail segment launch set for Wednesday. This offer provides a strategic opportunity to significantly increase stakes in one of India's largest financial institutions.