The government is gearing up for another round of divestments — this time with a focus on the Life Insurance Corporation (LIC) of India. Over the next two years, it plans to offload a 6.5% stake in the country’s largest insurer, gradually, in small chunks.
The strategy? Keep it steady, keep it simple — and give retail investors a heads-up.
“We are officially giving forward guidance for small investors to look out for it,” said Arunish Chawla, Secretary, Department of Investment and Public Asset Management (Dipam), in an interview with Business Standard. “This year, we will follow a strategy of regular offers for sale (OFS) in small tranches.”
The move is part of the government’s broader push to meet minimum public shareholding (MPS) norms set by the Securities and Exchange Board of India (Sebi), which mandate that all listed companies must have at least 25% public ownership.
LIC, which was listed on May 17, 2022, with a 3.5% stake sale, still has a long way to go to reach the 10% mark required by Sebi — a goal it must meet by May 16, 2027. If the Centre manages to sell the planned 6.5%, it would hit that target and potentially rake in ₹35,256 crore, going by LIC’s current market price.
Instead of pushing out a single, large public offer, the plan is to test the waters with smaller tranches over time — allowing the Centre to gauge market conditions and avoid flooding the market with too many shares at once.
Chawla emphasised that liquidity conditions and fair access for small investors will guide the disinvestment strategy. The move also aligns with the government’s attempt to avoid deep market shocks and ensure wider participation.
While most central public-sector enterprises (CPSEs) are already compliant with Sebi’s 25% public float norm, a few key players in the defence, railways, and financial sectors are still lagging.
“We are actively pursuing their disinvestment,” Chawla said. “Hopefully, within the next one year, we would like them to achieve MPS norms.”
That includes five public-sector banks — including Bank of Maharashtra and UCO Bank — which have until August 2026 to meet the 25% threshold. The government is expected to roll out similar gradual disinvestment plans for these entities as well.
While there’s no guarantee how the market will respond, the government’s move to give forward guidance and break down big sales into manageable parts could help reduce volatility.
It also gives small investors a better shot at participation — a gap that many say was evident during LIC’s initial public offering in 2022.
