Govt launches 2.5% OFS in LIC; floor price fixed at Rs 382 per share, retail investors can bid on Wednesday
New Delhi, August 3
The government will launch an Offer for Sale in Life Insurance Corporation of India on Tuesday for non-retail investors as part of its disinvestment programme, while retail investors will be able to place their bids on Wednesday.
The decision was announced by Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla in a post on social media.
"Offer for Sale in LIC opens tomorrow for Non-Retail investors. Retail investors can bid on Wednesday. Government offers to disinvest 2.5% equity with an additional 4% as a green shoe option. Floor price has been fixed as Rs 382 per share. This will help achieve MPS milestones ahead of schedule," he said in a post on X.
Under the offer, the government will divest a 2.5 per cent equity stake in the country's largest insurer. It has also kept an additional 4 per cent green shoe option, which allows the government to sell more shares than the base offer if investor demand is strong.
The floor price for the OFS has been fixed at Rs 382 per share.
An Offer for Sale (OFS) is a mechanism through which promoters of a listed company, including the government in the case of public sector enterprises, sell part of their shareholding through the stock exchange. The route enables promoters to reduce their stake in a transparent manner while providing institutional and retail investors an opportunity to participate in the share sale.
The green shoe option is a provision that allows the seller to retain the flexibility to sell additional shares over and above the base issue size if the offer receives strong demand from investors. In LIC's case, while the government is initially offering a 2.5 per cent stake, it may offload up to an additional 4 per cent under the green shoe option.
According to the DIPAM Secretary, the stake sale will help the government achieve Minimum Public Shareholding (MPS) milestones ahead of schedule. Under securities market regulations, listed companies are required to maintain a prescribed minimum level of public shareholding, and the OFS route is commonly used to meet this requirement.
The OFS will open for non-retail investors on Tuesday, while retail investors will be able to bid on Wednesday.
On Monday, LIC shares settled at Rs 424 apiece on the National Stock Exchange (NSE).
— ANI
Reader Comments
Honestly, I'm a bit skeptical. LIC is a great company, but the stock has been a bit sluggish since the IPO. At Rs 382, it's below the current market price, which might be tempting, but I need to see better profitability and growth before putting my hard-earned money in. Just saying. 🤔
Interesting to see the Indian government moving fast on divestment. The green shoe option adds flexibility, but I wonder if the timing is right given global market volatility. Still, LIC's fundamentals remain strong. Let's see how the retail response is tomorrow.
The floor price is below the current market price, which gives some comfort. But LIC's share price has underperformed since listing. The government should have done more to improve LIC's operational efficiency before selling more stake. Just my two paise. 💭
A positive step for the government's disinvestment target. LIC is a household name and this could be a good addition to a diversified portfolio. I might participate as a retail investor! Nice to see the retail segment being given a separate day for bidding. 👍
I am a bit concerned about the government's reliance on divestment to meet fiscal targets. While LIC is a solid company, we need to ensure that the management is empowered to compete effectively with private insurers. The floor price seems okay, but the real test is the oversubscription number tomorrow.
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