Govt Clears LIC OFS for FY26, Eyes ₹6,000 Cr per 1% Stake Sale

The Indian government has approved a significant step in its FY26 disinvestment roadmap by greenlighting an Offer for Sale (OFS) of its stake in Life Insurance Corporation of India (LIC), the country’s largest insurer. According to senior government sources, this move aims to increase retail participation, comply with regulatory norms, and unlock substantial value for the exchequer.

As of now, the Centre holds a 96.5% stake in LIC, while only 3.5% is with the public. LIC’s market capitalisation stands close to ₹6 lakh crore, meaning that each 1% stake sale could fetch around ₹6,000 crore. This OFS is expected to be one of the marquee disinvestment deals of FY26, with the potential to raise thousands of crores over several tranches.

The proposed sale is not only a revenue-generation measure but also part of a broader plan to bring LIC in line with SEBI’s minimum public shareholding (MPS) norms. In May 2023, SEBI mandated that LIC must raise its public holding to at least 10% by 2027. This aligns with the government’s earlier plans to reduce its 96.5% stake over time. In the 2022 LIC IPO, the government had sold just a 3.5% stake, raising ₹21,000 crore.

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LIC Stake Details and Market Impact
Sources indicate the Centre may sell its LIC stake in stages over the next two years. Based on the current market value, the remaining excess stake—beyond the SEBI-mandated 75% limit—is worth ₹1.28 lakh crore. The free float is still limited, with just 1.13% held by mutual funds and 1.67% with over 23 lakh retail shareholders.

Following news of the OFS approval, LIC shares slipped 1.23% to ₹934.35 on the NSE in morning trade on July 10. The stock remains near its IPO price of ₹949, showing a modest 5.5% gain so far in 2025, after falling from a 52-week high of ₹1,222.

LIC’s Financial Performance
LIC posted strong financials in Q4 FY25, reporting a 38% year-on-year jump in net profit to ₹19,013 crore. However, its total income declined to ₹2.41 lakh crore from ₹2.50 lakh crore in the same period last year. The board has proposed a final dividend of ₹12 per share, offering additional value to investors.

Conclusion

The Centre’s move to offload a portion of its LIC stake is a critical milestone in India’s disinvestment journey. It aims to unlock value, boost retail participation, and bring the public sector giant closer to market norms. As more details emerge in the coming weeks, investor interest is expected to intensify, with LIC’s next OFS likely to become a key event on Dalal Street.