Government Considers Further Stake Reduction in LIC

The government is contemplating reducing its stake in LIC through a public offering by the next financial year. Currently holding a 96.5% stake, it previously sold 3.5% via an IPO in May 2022. The upcoming stake sale aims to meet the mandated public shareholding requirement.

The government is evaluating the possibility of reducing its stake in the Life Insurance Corporation (LIC) through a public offering in the upcoming financial year, according to Financial Services Secretary M Nagaraju. Currently, the government retains a substantial 96.5% stake in LIC, following a previous sale of 3.5% in May 2022 through an initial public offering (IPO) at a price band of Rs 902-949 per share, which garnered approximately Rs 21,000 crore.

During a conversation with reporters, Nagaraju stressed the importance of a gradual approach to the LIC public offer, highlighting the role of the Department of Investment and Public Asset Management (DIPAM) in the process of government stake dilution in LIC. He mentioned that an LIC follow-on public offering (FPO) could be anticipated in the next financial year, provided all necessary approvals are secured and market conditions are favorable.

To comply with the mandated 10% public shareholding requirement by May 2027, the government needs to divest an additional 6.5% stake in the public sector life insurer. The exact details regarding the quantum of the stake sale, pricing, and timing are yet to be determined. On a financial note, LIC, the country's largest insurer, boasts a market capitalization of Rs 5.08 lakh crore, with its shares priced at approximately Rs 804 on the BSE. The state-owned insurer has reported a significant 32% increase in net profit for the quarter ending September 2025, driven by a reduced commission outgo and an improved total income of Rs 2,39,614 crore.