Disinvestment: LIC OFS draws record Rs 36,400 crore institutional bids

New Delhi: The government's mega stake sale in Life Insurance Corporation of India (LIC) got off to a flying start on Tuesday, with institutional investors submitting bids worth nearly Rs 36,400 crore, prompting the Centre to exercise the entire greenshoe option and expand the offer to 6.5 percent of the insurance giant's equity capital.

The overwhelming response makes the LIC issue the most subscribed institutional offer-for-sale (OFS) in terms of demand since the mechanism was introduced, underscoring strong investor appetite despite volatile equity markets and a sharp decline in LIC's share price on the day.

Follow The PSUWatch Channel on WhatsApp

Initially launched with a base issue of 2.5 percent, the OFS included a greenshoe option of an additional 4 percent, enabling the government to increase the size of the offering in the event of strong demand. Following robust participation from institutional investors, the Centre decided to exercise the entire greenshoe option, taking the total offer size to 82.22 crore shares, or 6.5 percent of LIC's paid-up equity capital.

Institutional investors bid for more than 94.45 crore shares at an indicative price of Rs 383.84 per share, translating into bids worth around Rs 36,400 crore.

In a regulatory filing, LIC confirmed that the government had exercised the oversubscription option for approximately 50.60 crore additional equity shares, equivalent to 4 percent of the company's paid-up equity share capital.

With the institutional portion completed, the focus now shifts to retail investors. Around 8.22 crore shares, representing 10 percent of the total issue size, have been reserved for retail investors, who can place their bids on Wednesday.

To encourage wider retail participation, the government has announced a discount of Rs 10 per share for retail investors and eligible employees bidding at the cut-off price.

Biggest disinvestment after LIC IPO

At the floor price of Rs 382 per share, the expanded OFS is expected to fetch nearly Rs 31,000 crore, making it one of the largest disinvestment transactions undertaken by the government since LIC's landmark IPO in 2022.

The size of the offer also places it among India's biggest equity transactions, comparable with the anticipated public offerings of the National Stock Exchange (NSE) and Reliance Jio Platforms.

Commenting on the response, DIPAM Secretary Arunish Chawla said the institutional portion of the OFS was subscribed 3.32 times the base issue size.

"The enthusiastic participation reflects robust investor confidence and the depth of India's capital markets," he said in a post on X.

Boost to disinvestment programme

The successful LIC stake sale is expected to provide a significant boost to the Centre's disinvestment receipts for FY27.

Including this transaction, the government is poised to substantially exceed the Rs 21,082 crore already mobilised this financial year through stake sales in public sector undertakings and proceeds from the Specified Undertaking of the Unit Trust of India (SUUTI).

Follow PSU Watch on LinkedIN

Beyond raising resources, the transaction marks another milestone in the government's strategy of broadening public ownership in state-run enterprises while ensuring compliance with Sebi's listing norms. For LIC, the increased public float is expected to improve trading liquidity, enhance institutional participation and strengthen its standing among large-cap benchmark stocks.

(PSU Watch is India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy. 👉 Click to join our channel now: PSUWatch WhatsApp Channel. Prefer LinkedIn? Follow PSU Watch on LinkedIN. Click to stay connected on Twitter here and stay updated)