India Plans $1 Billion LIC Stake Sale Next Month Through 2% Government Divestment

India is preparing to launch another major divestment in Life Insurance Corporation of India, with the government expected to begin formal marketing next month for a share sale that could raise as much as ₹10,000 crore ($1 billion), according to reports citing people familiar with the matter.

The proposed transaction involves the sale of around 2% stake in LIC and is likely to take place in late June or early July 2026, mainly targeting institutional investors. Discussions around the exact size, pricing and timing of the deal are still underway, and details may change before launch.

The Department of Investment and Public Asset Management (DIPAM), under the Finance Ministry, is reportedly working with Goldman Sachs Group Inc., Motilal Oswal Investment Advisors, BNP Paribas SA, and IIFL Capital Services to manage the transaction.

The planned sale comes four years after the government’s landmark LIC IPO in May 2022, when it sold 3.5% stake in the insurer and raised about ₹21,000 crore. That issue was priced at ₹949 per share and remains India’s biggest-ever public listing by issue size.

Shareholding And Market Response

As of 31 March 2026, the government held 96.5% stake in LIC. Under the Securities and Exchange Board of India norms, listed companies are required to maintain a minimum 25% public shareholding. LIC has been granted time until May 2032 to meet this threshold following its listing. Even after the proposed 2% sale, the government would continue to hold more than 94% in the insurer.

Market reaction was immediate. LIC shares fell nearly 3% on 27 May on the National Stock Exchange after the reports surfaced, touching an intraday low of around ₹818.5, as investors reacted to the possibility of additional equity supply entering the market.

Strong Earnings Ahead Of Sale

The stake sale news arrived shortly after LIC posted strong earnings for the March quarter. The insurer reported a 23% year-on-year rise in quarterly profit to ₹23,420 crore, while net premium income increased 11.5% to ₹1.65 lakh crore. LIC’s annualised premium equivalent rose 22% to ₹22,954 crore, and the value of new business climbed 67% to ₹5,891 crore, reflecting improving profitability and a stronger product mix.

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If completed, the LIC offer for sale would likely be among India’s biggest equity market transactions in the coming month and a key step in the government’s broader divestment and market-participation strategy. With volatile crude prices and global market uncertainty still in focus, investors will closely watch pricing, demand from institutions, and how the market absorbs another sizeable LIC stake sale.

Sources:

NDTV Profit

Economic Times