Government to divest up to 6.5% of LIC, targeting Rs 31,400 crore proceeds

The central government plans to offload up to 6.5% of Life Insurance Corporation (LIC) through an offer for sale that runs from Tuesday to Wednesday. The base tranche comprises 2.5% of LIC’s equity, priced at Rs 382 per share, which is 10% below the Monday closing price on the BSE. If investor interest is strong, a green-shoe clause permits an extra 4% to be issued, potentially raising about Rs 31,400 crore in total.

This sale will raise the public shareholding in LIC from the current 3.5% to the mandated 10%, satisfying SEBI’s minimum public shareholding norm ahead of schedule, according to DIPAM secretary Arunish Chawla. The inflow will expand the government's disinvestment kitty to roughly Rs 52,000 crore, and combined with asset monetisation earnings, bring total funds raised close to Rs 60,000 crore, aiding the budget’s subsidy commitments while keeping the deficit at 4.3% of GDP. The move follows a similar divestment of IDBI Bank shares and reflects the government's broader fiscal strategy.