The Indian government has initiated an Offer for Sale (OFS) to divest a significant portion of its holding in Life Insurance Corporation of India (LIC). This move, announced on August 3, 2026, aims to offload up to a 6.5% stake in the insurance giant, with the floor price set at ₹382 per share. The accelerated divestment is primarily driven by the need to comply with market regulator SEBI's public shareholding requirements.
Government Announces Major LIC Share Sale
The Centre's proposed OFS comprises a base issue of 2.5% equity, with an additional 4% available through a greenshoe option, contingent on strong institutional demand. This structure allows the government to divest a total of 6.5% of its equity in LIC, marking a substantial step towards increasing public float.
Bidding Schedule and Price Details
The bidding process for the LIC OFS is structured over two days:
- Non-retail investors will have the opportunity to place their bids starting on August 4, 2026.
- Retail investors will be able to participate on August 5, 2026.
A crucial detail for all prospective investors is the fixed floor price of ₹382 per share. Bids submitted below this threshold will not be accepted, ensuring a minimum price realization for the government. The final allotment price will be determined based on the overall demand witnessed during the two-day bidding window.
Accelerating Compliance with SEBI Norms
This latest share sale is a strategic effort to bring LIC into compliance with the Securities and Exchange Board of India (SEBI) mandates. Following its market debut in May 2022, where a 3.5% stake was sold, the government currently retains a 96.5% majority stake in the insurer. SEBI regulations require LIC to increase its public shareholding to at least 10% by May 2027, with an ultimate target of reaching a 25% free float over time.
Confirming the timeline and objectives, the Secretary of the Department of Investment and Public Asset Management (DIPAM) stated on X (formerly Twitter), "Offer for Sale in LIC opens tomorrow for Non-Retail investors. Retail investors can bid on Wednesday. Government offers to divest 2.5% equity with an additional 4% as a green shoe option. Floor price has been fixed as Rs 382 per share. This will help achieve MPS milestones ahead of schedule."
The successful completion of this OFS tranche will move the government closer to meeting these statutory benchmarks well ahead of the May 2027 deadline, while also enhancing the secondary market liquidity for LIC shares.