Centre launches LIC OFS to sell up to 6.5% stake at Rs 382 per share

OFS opens for non-retail investors

The central government has launched an Offer for Sale (OFS) to sell up to 6.5% stake in Life Insurance Corporation of India (LIC). The floor price has been fixed at Rs 382 per share, according to the official notice. The non-retail portion of the issue will open on August 4.

This move is expected to fetch the exchequer over Rs 30,000 crore, making it one of the largest disinvestment exercises in recent times. Reports indicate the government is looking to raise at least $1.3 billion through this sale.

How the OFS is structured

The OFS will be conducted in two phases. The non-retail category, which includes institutional investors, will be able to bid on August 4. Retail investors, who are eligible for a discount, will get their turn on August 5.

The government currently holds a majority stake in LIC, and this sale will reduce its holding by up to 6.54%. The exact number of shares to be sold will depend on demand, but the overall cap is set at 6.5%.

Pricing and discount for retail buyers

Retail investors will be offered a discount of Rs 20 per share over the final discovered price. This is a standard feature in government OFS to encourage wider participation from individual investors.

The floor price of Rs 382 represents a small discount to the prevailing market price, which has been hovering around the Rs 400 mark in recent sessions. Analysts see this as an attractive entry point for long-term investors.

Why this matters

This OFS is part of the government's broader disinvestment roadmap for the current financial year. The proceeds from the LIC stake sale will help bridge the fiscal deficit and fund infrastructure and social sector spending.

The Life Insurance Corporation is the country's largest insurer and a key player in the financial market. Its stock has been in focus since its listing in 2022, which was the biggest IPO in Indian market history.

Market participants will be watching the subscription numbers closely. A strong response from institutional investors could boost sentiment in the broader market.

What to expect next

The final price will be determined after the bidding closes. The government is expected to announce the allocation and final quantum of shares sold by the end of the week.

Investors and analysts will also track the response from foreign institutional investors, who have shown mixed interest in Indian PSU stocks over the past year. The success of this OFS could set the tone for other disinvestment plans in the pipeline.