A large stake of LIC is going to be sold, investors should tighten their belts

LIC Stake Sale:  The government is going to reduce its stake in the country’s largest insurance company LIC. Currently, the central government has a 96.5 percent stake in this public sector giant company. The central government is going to make about 5 percent of it available in the market. For this, the path of Follow On Public Offer (FPO) or Qualified Institutional Placement (QIP) can be adopted. People had showered a lot of love on LIC’s IPO.

Minimum public shareholding rule has to be followed 

A report in The Hindu Business Line claims that the government is seriously considering reducing its stake in Life Insurance Corporation. They have to bring LIC under the ambit of minimum public shareholding (MPS) rule of market regulator SEBI.

An IPO of Rs 21,000 crore came in May 2022 

LIC’s IPO came in May 2022. This IPO was worth Rs 21,000 crore. It is considered to be India’s largest IPO. It was completely launched in the market through Offer for Sale. The company sold 221,374,920 equity shares at a price of Rs 949. Through the IPO, the government reduced its 3.5 percent stake in it. Now if the government brings FPO or QIP, it will get more valuation.

Public shareholding will have to be increased to 10% by 2027

On December 20, 2023, the Department of Economic Affairs of the Ministry of Finance gave LIC 10 years to come under the purview of MPS rules. The company has time till May 2032 to put its 25 percent stake in the market. Apart from this, SEBI has given LIC 3 years to achieve 10 percent public shareholding. The deadline to achieve this limit is May 16, 2027.