Government Mulls LIC Stake Sale via FPO in Next Financial Year

The Indian government is actively considering selling a portion of its stake in Life Insurance Corporation of India (LIC) through a Follow-on Public Offering (FPO) in the next financial year.

Currently, the Centre holds 96.5% of LIC’s share capital. In May 2022, the government divested 3.5% of the insurer’s equity via an Initial Public Offering (IPO) at a price band of ₹902-₹949 per share, raising around ₹21,000 crore.

Financial Services Secretary M. Nagaraju said the LIC public offer would be approached cautiously and executed “slowly,” with the Department of Investment and Public Asset Management (DIPAM) examining the timing and structure of the stake reduction. An FPO may be launched in the next fiscal year if all necessary approvals are in place and market conditions remain conducive, he added.

Meeting the Public Shareholding Norm

The government is required to offload the remaining 6.5% of its LIC stake to meet the mandated 10% public shareholding requirement by May 2027, in accordance with regulatory norms. The quantum, pricing, and timing of the proposed stake sale have not been finalised and will be determined based on market conditions closer to the transaction date.

With a current market capitalisation of approximately ₹5.08 lakh crore, LIC remains one of India’s largest listed entities, and its share price was trading around ₹804 on the BSE on the latest session.

LIC Financial Performance Highlights

LIC’s recent quarterly results showed continued profitability, with net profit rising about 32% year-on-year to ₹10,053 crore in the three months ended September 2025, up from ₹7,621 crore in the corresponding period last fiscal. This was driven in part by lower commission outgo. The total income also increased to about ₹2.39 lakh crore against ₹2.29 lakh crore in the previous year quarter.

What Does This Mean for Investors?

The government’s plan to consider a follow-on public offering in LIC points to a gradual increase in public float, which could improve liquidity and broaden institutional participation over time.

The timing, pricing, and size of the stake sale will, however, be important determinants of the response of the investors, especially considering that the LIC is a company with massive market capitalisation, sensitive to the market conditions.

While compliance with minimum public shareholding norms removes a regulatory overhang, near-term stock performance is likely to remain influenced by execution clarity, broader market sentiment and LIC’s earnings trajectory. Investors should therefore closely track official announcements on the structure and scheduling of any proposed FPO in the coming financial year.

Source:

Economic Times

Business Line

The Times of India