LIC Stake Sale: Government Unlikely to Sell More Shares Soon; 10% Public Float Target in Focus
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LIC is unlikely to see another government stake sale in the near term after the Centre's 6.5% dilution in August. The government must raise public shareholding to 10% by May 2027 and 25% by 2032, while institutional ownership has increased since the insurer's 2022 listing.
Life Insurance Corporation of India (LIC) is unlikely to see another round of government stake dilution in the near term, even as the Centre remains on track to meet its public shareholding requirements, LIC Chairman and CEO R Doraiswamy said, according to NDTV citing ANI.
The government has remained LIC's majority shareholder since the insurer's landmark 2022 IPO, when it sold a part of its holding to public investors. Doraiswamy said LIC was wholly owned by the government until 2022, when the decision was taken to list the corporation and gradually reduce the Centre's stake.
As part of the listing, LIC was given a special dispensation to raise public shareholding to 10% by May 2027, five years after the IPO, and to 25% by 2032, or 10 years after listing.
The government has since carried out another round of dilution. In the first week of August, it sold an additional 6.5% stake in LIC through a block deal, raising more than Rs 30,000 crore, Doraiswamy said.
LIC does not expect any further government stake sale in the immediate future, although the Centre will continue to follow the mandate on public shareholding, he noted
“We do not expect any further offloading in the immediate future, but the government will follow the course as per the mandate given,” he said, according to ANI.
The government's latest stake sale has already taken LIC closer to the first public-shareholding milestone. The Centre now needs to meet the longer-term requirement of raising public ownership to 25% by 2032.
LIC shareholder base changes after listing
Doraiswamy also pointed to a change in LIC's shareholder mix since its stock market debut. Institutional participation was relatively limited at the time of the IPO but has increased since then.
Indian mutual funds now hold around 5.5% of LIC, while foreign portfolio investors own another 1.2%, according to his remarks reported by ANI.
The increase in institutional ownership comes as the government has gradually reduced its stake and the stock has developed a broader public shareholder base.
For now, another government stake sale does not appear to be imminent. However, the Centre still has to reduce its holding further over the coming years to meet the 25% public-shareholding requirement by 2032.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
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