
State-run insurance company Life Insurance Corporation of India (LIC) has received a three-year extension from the Securities and Exchange Board of India (SEBI) to comply with minimum public shareholding norms. This extension allows LIC to achieve a 10% public shareholding within a period of five years from the date of listing. The revised timeline for LIC to achieve this requirement is on or before May 16, 2027.
Implications for Investors and the Stock Market
The news of LIC’s extension to comply with minimum public shareholding norms is a relief for investors as it delays the possibility of a supply overhang resulting from a potential offer for sale (OFS) by the government to meet the norms. As a result, LIC’s stock price jumped 3% to a high of Rs 962.
SEBI Rules on Public Float and Compliance Timelines
SEBI rules mandate that all listed companies maintain a 25% public float, but newly-listed companies are granted a three-year window to fulfill this requirement. However, for companies with a post-issue market capitalization of over Rs 1 lakh crore, the timeline to meet the 25% minimum public shareholding (MPS) rule is extended to five years.
Background on LIC’s Ownership and Recent Developments
LIC is a government-owned entity, with the Indian government holding a 96.5% stake in the company. In May 2022, the government sold a 3.5% stake in LIC through an initial public offering (IPO). However, the stock has not seen significant gains since its IPO, trading only marginally higher than its issue price of Rs 949.
Despite this, LIC’s shares have experienced a 69% increase in the past year due to various factors, including expectations of growth revival in FY25 and the possibility of increased dividends.
Conclusion
LIC has been granted a three-year extension by SEBI to comply with minimum public shareholding norms, allowing the company more time to achieve the required 10% public shareholding. This news is a relief for investors and has positively impacted LIC’s stock price.