LIC shares fell 8.5% after the government launched a 6.5% stake sale through an OFS at a floor price of ₹382 per share, a discount to the market price. The stake sale could raise over ₹31,000 crore and reduce the government's holding from 96.5% to around 90%, helping meet SEBI's minimum public shareholding norms.
The stocks of the Life Insurance Corporation of India Ltd (LIC) had been under pressure on Tuesday, August 4, following the opening of the Offer for Sale (OFS) by the government to non-retail investors. Shares had fallen up to 8.5 percent as a result of this OFS that was taking place at a discount.
LIC shares had closed at ₹424.35 on the BSE on Monday, falling by ₹0.50 or 0.12 percent from the previous close. The government had fixed the floor price at ₹382 per share for this OFS, and this translates to a discount of about 10 percent.
Government Plans to Sell 6.5% Stake in LIC Through OFS
It has been declared by the Government of India that it would sell up to 6.5% stake in the LIC through an OFS. The OFS has both base offer and additional offer of 2.5% equity share each.
In the event that the OFS is fully subscribed, then there will be more than 82.22 crore shares sold by the government, and it could possibly help the government raise more than ₹31,000 crore. This stake sale is part of the disinvestment program of the government in which funds are raised through stake dilution in PSUs.
The OFS will begin on Tuesday, August 4, for non-retail investors, and retail investors will get their chance to subscribe on Wednesday, August 5.
Why LIC Stock Fell After the OFS Announcement
The price of LIC shares came down because of worries about the increased supply of shares in the market and OFS being sold at a discount by the government. The floor price of ₹382 per share, which is much lower than the current market price, led to a short-term fall in prices as investors made adjustments to their expectations about the stock.
The move by the government to sell a major portion has caused worries regarding the imminent selling pressure as more shares become available. However, the earlier OFS by the government was well subscribed because of the discounts offered.
Government Stake to Reduce After Share Sale
The Government of India presently owns 96.5% of the stake in LIC. Post the OFS process, the ownership is estimated to come down to approximately 90%.
The Securities and Exchange Board of India (SEBI) had provided an extension to LIC till May 2027 in order to comply with the Minimum Public Shareholding norms. This stake sale would help the government in complying with the said regulations.
LIC had made its market debut by means of an Initial Public Offer (IPO) in May 2022 when the government sold out a 3.5% stake. The IPO was offered at a price range of ₹902 to ₹949 per share and raised approximately ₹21,000 crore.
LIC’s Market Position and Recent Developments
LIC continues to be the largest life insurance company in India with a market share of more than 56% by virtue of premium income. As of March 2026, the company’s assets under management stood at ₹57.29 lakh crore.
As of now, the market capitalisation of the company stands at more than ₹5.36 lakh crore. Additionally, LIC has been issued a demand order of income tax of ₹6,146.71 crore for FY22 and has indicated its intentions to challenge the same.
So far in the current financial year, the government has raised ₹21,082 crore through the sale of stakes in seven PSUs and the SUUTI route.
The recent OFS of LIC can be seen as one of the largest sale of stakes by the government.
