Modi Govt plans to sell 2-3% stake in this company to meet target of…, by…

LIC share price declined by 2.9% amid reports suggest govt to sell 2-3% stake and also after it NBP falls 22% YoY

The central government is planning to sell a 2-3% stake in Life Insurance Corporation (LIC) during the 2025-26 fiscal year, subject to favorable market conditions. This move is part of a broader strategy to meet the mandated 10% public shareholding target for LIC by May 2027, according to media reports.

Reports from Mint suggest that the stake sale could occur in multiple smaller tranches instead of a single large offering, with the aim of maximizing returns on the government’s shareholding in the state-run insurer.

The Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance had previously invited bids from merchant bankers and legal advisers to facilitate the sale of minority stakes in LIC and other public sector banks (PSBs) as part of the government’s ongoing divestment plan for the next three years.

LIC’s Initial IPO

The decision aligns with SEBI’s minimum public shareholding (MPS) norms, which require all listed companies to maintain a 25% public float. Newly listed entities, such as LIC, are granted a three-year grace period to comply. However, companies with a market capitalization exceeding Rs 1 lakh crore are allowed a five-year timeline to meet the 25% MPS mandate.

In May 2022, the government conducted an Initial Public Offering (IPO) for LIC, divesting a 3.5% stake through an Offer for Sale (OFS), which raised approximately Rs 21,000 crore.

LIC Share Price Performance

Over the past year, its share price has declined by 23.29%.In Year-to-date (YTD) performance shows a fall of 15.61%. In the last six months, the stock has dropped significantly by 26.66%, while the three-month performance reflects a decline of 18.60%. Even in the short term, the price fell by 3.37% over the past month.

After the life insurance company reported a 22 per cent drop in new business premiums (NBP) and reports also suggested that the government is planning to sell 2-3 per cent stake in the company, LIC stock fell in the share market this morning.