The government's Offer for Sale (OFS) in Life Insurance Corporation of India (LIC) has received an exceptional response from institutional investors on its opening day. According to Business Standard, the government sold a total of 82.22 crore equity shares, equivalent to a 6.5% stake in LIC, including the base offer of 31.62 crore shares and an additional 50.59 crore shares under the oversubscription option. The non-retail portion, comprising 74 crore shares, was subscribed 1.57 times, receiving bids for 129.48 crore shares against the 100% subscription as of noon on Tuesday. The bids came at an indicative price of ₹383.10 per share, slightly above the floor price of ₹382 fixed for the issue. The government is offering over 284.6 million shares to institutional buyers at a floor price of ₹382 per share. Bidding will continue till 3:30 PM, with retail investors able to place bids on Wednesday, August 5.
The retail portion of the LIC OFS has attracted significantly weaker investor interest compared to institutional demand, with retail investors subscribing only 69% of the base issue size as of Wednesday's close. According to BSE Ltd. data, the retail portion, comprising 8.22 crore shares, received bids for 5.71 crore shares, translating into a subscription of 69% of the total retail allocation. Against the total retail issue size of 8.22 crore shares, the subscription stood at 0.7 times, though when measured against the base issue size, the demand was at 70%. This contrasts sharply with robust institutional demand that prompted the government to increase the sale size from the initially planned 2.5% to 6.5%. Retail investors and employees bidding at the cut-off price are eligible for a discount of ₹10 per share, as per LIC's earlier filing. The clearing price for non-retail bidders has been fixed at ₹383.10, slightly above the floor price. The government offered a 10-rupee discount for retail investors on the final allotment price, providing some arbitrage opportunity as LIC's shares closed at almost 3% premium over the floor price.
The government has decided to exercise the green-shoe option in the LIC OFS after the overwhelming institutional response. As per DIPAM Secretary Arunish Chawla on X, this decision comes after institutional investors over-subscribed the portion reserved for non-retail investors by putting in bids worth ₹36,400 crore. The two-day OFS will now sell up to 6.5% stake or over 82.22 crore shares in the country's largest insurer at the floor price of ₹382 per share. The issue comprises a base offer size of 2.5% with a green shoe option of 4%, making it comparable in size to the upcoming mega IPO offerings of the NSE and Reliance Jio Platforms. The green shoe option allows the seller to extend the issue in case of strong demand, typically up to 15% of the base offer size without reopening the whole issue.
LIC shares declined sharply after the OFS announcement, with the stock down more than 7% so far in 2026 despite the government's disinvestment exercise. The company currently commands a market capitalisation of around ₹2.48 lakh crore. According to The Financial Express, there are several factors influencing LIC's stock performance, including market volatility and investor concerns about possible government stake sales. The stock had declined 8.7% to ₹391.3 on Tuesday, making it the top loser on the Nifty 500 index, as the OFS opened with the floor price set at ₹382 per share representing an 11% discount to the market price of ₹424.40 on July 3. However, LIC shares opened at ₹386 apiece today, as compared to previous close of ₹391.30 on Tuesday, recovering from the previous session's decline. The floor price for the OFS was set at ₹382 per share, a discount of about 10% to LIC's closing price.
The stake sale, including the greenshoe option, may mobilise around ₹31,400 crore in disinvestment receipts, based on the designated floor price for the OFS. As per PTI, at the floor price, the sale of over 82.22 crore shares or a 6.5% stake will fetch about ₹31,400 crore to the Centre's disinvestment kitty. This will take the government's total disinvestment proceeds through the OFS route past ₹50,000 crore for the current financial year. The government aims to raise ₹80,000 crore as miscellaneous capital receipts in FY27, including proceeds from disinvestment and asset monetisation, and has achieved nearly 35% of the target so far this financial year. So far in the current fiscal, the government has mopped up ₹21,082 crore through stake sale in seven public sector undertakings and remittances from SUUTI (Specified Undertaking of the Unit Trust of India). The LIC OFS follows similar stake sales by the government in several state-run companies this year, including Central Bank of India, Coal India, NHPC, and NLC India, as part of its broader disinvestment and public shareholding objectives.
