The central government is planning to sell a 2-3% stake in Life Insurance Corporation (LIC) during the financial year 2025-26, depending on market conditions. According to a report by Mint, this sale is part of the government’s plan to meet SEBI’s requirement of at least 10% public shareholding in LIC by May 2027.
Why is the Government Selling LIC Shares?
Currently, the government owns 96.5% of LIC. However, as per the rules set by the Securities and Exchange Board of India (SEBI), all listed companies must have at least 10% public ownership. Initially, SEBI had set a May 2024 deadline for LIC to meet this requirement, but it was later extended to May 16, 2027.
To comply with this rule, the government must gradually reduce its stake in LIC by selling shares to the public. The planned sale of 2-3% is a step in this direction.
How Will the Government Sell LIC Shares?
Instead of selling a large number of shares at once, the government is likely to sell its stake in smaller parts to get the best price. A source quoted in the report said that because LIC is a big company, any stake sale can have a major impact on the stock market.
By selling shares in phases, the government hopes to maximize LIC’s stock value. If market conditions are not favorable, the government may delay the sale or request an extension beyond 2027.
Government Seeks Experts to Handle Stake Sale
To manage the sale smoothly, the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance has invited merchant bankers and legal advisors. These experts will help the government sell shares in LIC, as well as in other public sector banks and financial institutions over the next three years.
How Much Money Can the Government Earn from the Sale?
As of Tuesday, March 12, 2025, LIC shares were trading at ₹754.10 per share on the Bombay Stock Exchange (BSE). LIC’s total market value is about ₹4.8 trillion.
If the government sells 2-3% of LIC shares, it could earn between ₹9,500 crore and ₹14,500 crore. This money can be used for various government projects and financial needs.
Previous Plans and Future Strategy
In June 2024, the government had paused the LIC stake sale for 2024-25 to check investor sentiment. The next sale is now planned for 2025-26.
The first sale may involve 1.5% of the government’s shares, increasing the public ownership of LIC to 5%. This could make LIC eligible to be included in stock market indices, attracting big institutional investors.
Later, the government may sell another 1-1.5% of LIC shares, depending on how the market responds. If market conditions are unfavorable, the government might delay the sale or ask for more time.
Conclusion
The government’s plan to sell LIC shares is part of its effort to meet SEBI’s rules on public shareholding. The sale will be done in phases to get the best price and minimize market impact. Experts will help manage the sale, and if successful, the government could earn up to ₹14,500 crore.
While the sale is planned for 2025-26, the government will monitor market conditions before proceeding. If the market is not favorable, it may delay the sale or request an extension beyond 2027.
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