Will there be another LIC stake sale after the ₹31,552 crore OFS? CEO answers

Life Insurance Corporation (LIC), India's largest life insurer and the country's biggest domestic institutional investor (DII), remained in the spotlight this week amid the Centre's 6.5% offer for sale (OFS) and the announcement of its June quarter (Q1 FY27) earnings.

The OFS received an overwhelming response from both retail and non-retail investors, enabling LIC to raise a record ₹31,552 crore through India's largest public offering.

Four years after raising nearly ₹21,000 crore through LIC's 2022 initial public offering (IPO), the government launched a 6.5% offer for sale (OFS) in August 2026, with an issue size comparable to the upcoming mega IPOs of NSE and Reliance Jio Platforms.

The OFS comprised a 2.5% base offer and a 4% greenshoe option, taking the total offer size to 82.23 crore equity shares, or 6.5% of LIC's equity capital.

The stake sale was aimed at helping LIC meet the minimum public shareholding (MPS) requirement mandated by the market regulator, SEBI, ahead of the May 16, 2027 deadline. Before the OFS, the government owned 96.5% of the insurer.

What lies ahead?

Asked about further stake dilution by the government to meet 25% public float, LIC CEO & MD R Doraiswamy said, "What we are hearing, the government is unlikely to go in for a public offer in the next 18-24 months as LIC has time till 2032 for meeting the minimum public shareholding (MPS) norm of SEBI."

LIC has already met 10% public float much ahead of schedule, the CEO said, adding, as per the special dispensation, LIC had to meet 10% public float by May 2027.

The CEO exuded confidence that the increase in public holding would lead to improvement in share prices of LIC.

Earlier this year, LIC issued a 1:1 bonus share to increase the number of shares.

LIC's MPS requirement

Under SEBI's minimum public shareholding (MPS) norms, listed companies are generally required to maintain at least 25% public shareholding.

However, because of LIC's massive size, the insurer was allowed to list in May 2022 with a much lower public float of 3.5%.

In May 2024, SEBI granted LIC an additional three years to increase its public shareholding to 10%, extending the deadline to May 16, 2027. With the recently concluded 6.5% offer for sale (OFS), LIC has achieved the 10% public shareholding requirement well ahead of schedule.

The next milestone for LIC is to comply with the broader 25% MPS requirement.

In December 2023, the Department of Economic Affairs granted the insurer a one-time exemption, allowing it 10 years from the date of listing to achieve 25% public shareholding. This means LIC has until May 2032 to meet the norm.

LIC Q1 FY27 earnings

LIC on Thursday posted a 23% rise in net profit to ₹13,492 crore in the first quarter of the ongoing financial year (Q1 FY27), helped by an increase in new business.

The country's biggest insurer had earned a profit of ₹10,987 crore in the corresponding quarter a year earlier.

The total income of the insurer during the reporting quarter improved to ₹2,37,848 crore from ₹2,22,864 crore in the same period of the preceding fiscal year, LIC said in a regulatory filing.

Commenting on quarterly numbers, the CEO said the total premium income in the June quarter was ₹1,27,250 crore as compared to ₹1,19,200 crore in the corresponding quarter of the previous year, registering a growth of 6.75%.

"What gives us even more happiness is that our Value of New Business (VNB) has grown by 61% plus and our VNB margin has expanded by 7.5% to 22.90% this year. This is a direct outcome of our product diversification and distribution strategy," the CEO said.

This week, the Government of India sold an additional 6.5% of shares through an offer for sale (OFS), which has been well received by the markets, the CEO said.

"I want to welcome the new shareholders through the OFS into the LIC shareholder family and also thank the existing shareholders who have participated in the OFS for their continued faith in LIC," he said.