The Government may consider up to 5 per cent stake dilution in Life Insurance Corporation of India (LIC) in the current fiscal as part of incremental steps to meet the minimum public shareholding (MPS) norm.

The Centre had mopped up ₹21,000 crore in May 2022 via an initial public offer (IPO) of India’s largest life insurer.

LIC’s IPO, the biggest so far in the history of the Indian capital markets, comprised entirely of an offer-for-sale by the Government (of 221,374,920 equity shares of ₹10 each) at ₹949 apiece, accounting for 3.5 per cent of its paid-up capital.

Sources said the Government, which holds 96.5 per cent stake in LIC, is weighing options such as a follow-on public offer (FPO) and qualified institutions placement (QIP) to dilute a small portion of its stake. This could fetch higher valuation vis-a-vis the IPO, going by the current stock price.

On December 20, 2023, the Department of Economic Affairs, Ministry of Finance, had granted the Corporation a one-time exemption, allowing it to achieve 25 per cent MPS within 10 years from the date of listing -- till May 2032, in the public interest.

Further, on May 14, 2024, the Securities and Exchange Board of India (SEBI) granted the Corporation additional time of three years to achieve 10 per cent public shareholding – that is within a period of 5 years from the date of listing (till May 16, 2027).

The Centre will do a piecemeal disinvestment of its holding to maximise realisation within the deadlines, said the sources quoted above.

“While our focus remains primarily on profitable growth in market share, our objective is to create value for all stakeholders....While our total premium growth was stable during the year, going forward we are planning to intensify our efforts and deploy all necessary resources to enhance our market share.

“We have already rolled out our prestigious project called Digital Innovation and Value Enhancement (DIVE). This will cut across the entire value chain and enhance the digital experience of all our stakeholders from on-boarding to claims settlement,” Siddhartha Mohanty, Chief Executive Officer & Managing Director, LIC, said in a communication to shareholders.

LIC’s market share by premium and number of policies stood at 58.87 per cent and 69.91 per cent, respectively, as at the end of FY2024.

The Corporation’s shares, which were listed with the stock exchanges with effect from May 17, 2022, closed at ₹1,079.20 per share on Tuesday, down 2.49 per cent on BSE, as compared to the previous close of ₹1,106.80. The 52-week high and low of the stock is ₹1,221.50 and ₹597.65, respectively.

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