Govt plans gradual 6.5% divestment in mega insurer LIC: Report
The Union government is preparing to gradually pare down its stake in state-owned insurance giant Life Insurance Corporation (LIC).
The government plans to divest its stake in LIC through multiple smaller tranches via the offer for sale (OFS) route, aiming to give retail investors regular opportunities to participate in the share sales.
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The union government is set to gradually reduce its stake in state-owned mega insurer Life Insurance Corp LIC ), according to a report from Business Standard. The plan is to divest 6.5% of its shareholding over the next 24 months.This move is part of a broader strategy to increase public shareholding in central public-sector enterprises (CPSEs) in compliance with market regulations.The government intends to carry out the LIC divestment in multiple small tranches, using the offer for sale (OFS) route. The plan aims to provide regular opportunities for retail investors to participate in these share sales.The divestment is part of a broader effort to ensure compliance with the regulator Sebi's minimum public shareholding norms, which require listed firms to maintain at least 25% public shareholding.While most CPSEs have achieved this benchmark, some firms in critical sectors such as defence, railways, and financial services are still lagging.LIC's listing in May 2022 was a landmark event, marking the debut of India's largest insurance company on the stock exchanges. The IPO, which raised over Rs 21,000 crore, was one of the largest public issues in Indian history, though the stock has faced a turbulent journey since its listing.Despite the initial hype, LIC's share price experienced significant volatility, impacted by broader market conditions and investor concerns over its growth prospects. On Monday, LIC shares are up 0.2% following the government's divestment report. The company currently has a market capitalisation of about Rs 5.4 lakh crore.The planned gradual divestment of LIC reflects the government's strategy to avoid a sudden impact on the stock's market price while providing consistent opportunities for retail investors.The government's broader focus on increasing public participation in CPSEs also aligns with Sebi's public shareholding mandate, which aims to enhance liquidity, transparency, and corporate governance in publicly traded companies.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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