The Government of India’s Offer for Sale (OFS) of a 6.5% stake in Life Insurance Corporation of India (LIC) received a strong response from institutional investors on the first day of bidding, with bids worth approximately ₹36,400 crore. Demand for the LIC share OFS was robust enough that the Centre exercised the greenshoe option, increasing the number of shares on offer from the initial base issue. The successful first-day response is a key step in the government’s divestment programme and will help LIC move closer to meeting the Securities and Exchange Board of India’s (SEBI) minimum public shareholding requirement.
The two-day OFS is structured with the first day reserved for non-retail investors, while retail investors can bid on the second day. The government is offering the shares at a floor price of ₹382 per share, representing a discount to the prevailing market price to encourage participation. If the entire 6.5% stake is sold, the Centre is expected to raise about ₹31,000 crore, making it one of India’s largest stake sales since LIC’s landmark IPO in 2022.
Institutional Investors Fully Subscribe on Day One
The institutional portion of the OFS witnessed strong participation.
Key highlights include:
- Institutional investors placed bids worth approximately ₹36,400 crore.
- Bids were received for over 94.45 crore shares.
- The indicative bid price stood at ₹383.84 per share.
- The government exercised the greenshoe option following oversubscription.
OFS Snapshot
| Item | Details |
|---|---|
| Company | Life Insurance Corporation of India (LIC) |
| Stake on Offer | Up to 6.5% |
| Floor Price | ₹382 per share |
| Day 1 Bid Value | Approximately ₹36,400 crore |
| Investor Category | Institutional (Non-retail) |
Why the Stake Sale Matters
The OFS is part of the government’s broader disinvestment strategy and serves an important regulatory objective.
The stake sale will:
- Increase LIC’s public shareholding.
- Help the insurer comply with SEBI’s minimum 10% public shareholding requirement ahead of the May 2027 deadline.
- Support the Centre’s FY27 disinvestment and asset monetisation programme.
Following the sale, the government’s ownership in LIC will reduce from 96.5%, while public shareholding will rise toward the mandated level.
Regulatory Impact
| Before OFS | After Full OFS (Expected) |
|---|---|
| Government Stake | 96.5% → Around 90% |
| Public Shareholding | 3.5% → 10% |
LIC Shares Fall After Discounted Offer
LIC’s stock declined sharply after the OFS announcement because the shares were offered at a significant discount. We covered the immediate market reaction here: LIC shares crash 9% after the Centre launches the discounted OFS.
According to market data:
- LIC shares fell nearly 9% during trading.
- The floor price of ₹382 represented roughly an 11% discount to the previous closing price.
- Analysts said the decline largely reflected pricing adjustments associated with the discounted share sale rather than changes in LIC’s underlying business fundamentals.
Retail Investors Can Bid Next
After the institutional bidding phase, the OFS opens for retail investors.
Retail participants:
- Can place bids on the second day of the issue.
- May receive applicable retail discounts, subject to the offer terms.
- Will determine the final level of overall subscription before the share sale concludes.
Significance for the Government’s Divestment Programme
The LIC OFS is among the largest public sector stake sales undertaken in recent years. Large block deals have been a recurring feature of Indian markets this quarter — Adani Infra bought a 1.03% stake in Adani Green for ₹2,380 crore — though a government OFS of this size is in a different league.
If fully subscribed, the transaction will:
- Raise around ₹31,000 crore for the government.
- Improve liquidity in LIC shares.
- Increase institutional and retail participation in India’s largest insurer.
- Advance the government’s broader capital market and divestment objectives.
Looking Ahead
The strong institutional response on the first day of LIC’s Offer for Sale indicates healthy investor appetite despite the discounted pricing and the initial decline in the stock price. With bids worth around ₹36,400 crore prompting the government to exercise the greenshoe option, the transaction has begun on a positive note and moves LIC closer to meeting SEBI’s public shareholding norms.
Looking ahead, attention will shift to retail investor participation, which will determine the final success of the OFS. A fully subscribed issue would not only help the Centre raise nearly ₹31,000 crore but also improve trading liquidity in LIC shares and support the government’s broader divestment programme while expanding public ownership in India’s largest life insurer.
Frequently Asked Questions
What is the LIC share OFS floor price?
The government set a floor price of ₹382 per share for the LIC OFS — roughly an 11% discount to the previous closing price. On day one, institutional bids came in at an indicative price of ₹383.84 per share, slightly above the floor.
Can retail investors bid in the LIC OFS?
Yes. The OFS runs over two days: day one is reserved for non-retail (institutional) investors, and retail investors can place bids on day two. Retail participants may also receive an applicable retail discount, subject to the terms of the offer.
Why did the LIC share price fall during the OFS?
LIC shares fell nearly 9% because the stake was offered at a steep discount to the market price, which pulls the traded price toward the offer price. Analysts said the drop reflected that pricing adjustment rather than any change in LIC’s underlying business fundamentals.
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