LIC Shares Tumble 9% as Govt Launches OFS to Sell Up to 6.5% Stake

Mumbai, August 4: Shares of Life Insurance Corporation of India (LIC) fell sharply in Tuesday’s session, tumbling as much as 8.87 per cent intra-day, after the government launched a long-awaited Offer for Sale (OFS) to divest up to a 6.5 per cent stake in the country’s largest insurer at a steep discount to its previous closing price. 

The stock opened at Rs 392.00, down 8.52 per cent against its previous close of Rs 428.50, and touched an intra-day high of Rs 402.40 before renewed selling pulled it down to a low of Rs 390.50. The counter was seen changing hands at Rs 396.45 apiece at one stage during the morning session, down Rs 32.05 or 7.48 per cent, before it changed hands at Rs 396.60, down Rs 31.90 or 7.44 per cent, at last update. The volume weighted average price for the day stood at Rs 397.13. 

The stock’s swings played out over the course of the morning session, between 9:00 am and 11:00 am, as it slid from opening levels near Rs 392 to its intra-day low, before clawing back a large part of the losses to touch a high of Rs 402.40 around mid-morning, and then easing back to trade closer to Rs 396 levels by late morning. Trading in the counter remains underway, with the session yet to close. 

By last check, orders on the exchange for LICI were favouring the buyers, with 56.19 per cent of the total outstanding orders or 25,87,876 shares on the bid, compared with 43.81 per cent or 20,17,864 shares on the offer side, moments after displaying a similar pattern of 56.23 per cent or 26,46,749 shares on the buy-side against 43.77 per cent or 20,60,132 shares on the sell-side. 

LIC Shares Trend: Last Week 

Zooming out to view the stock’s performance over the last week, it is seen that after starting near Rs 428 levels on Tuesday, July 28, the stock eased to the week’s low of around Rs 424 by Wednesday, July 29, before holding largely steady through Thursday and edging higher on Friday, July 31. It then rallied further on Monday to close the week at Rs 428.50, its high for the period. With Tuesday’s sharp fall, LIC has given up virtually all of the gains it made through the week. 

Govt Launches OFS to Sell Up to 6.5% Stake in LIC at Rs 382 Floor Price 

The stock’s slide came after the Department of Investment and Public Asset Management (DIPAM) announced that the government will sell up to a 6.5 per cent stake in LIC through a two-day OFS, comprising a base offer of 2.5 per cent equity along with an additional 4 per cent green shoe option, at a floor price of Rs 382 per share. The issue opened for non-retail investors on Tuesday, August 4, with retail investors able to bid on Wednesday, August 5. 

The floor price represents roughly a 10 per cent discount to LIC’s previous closing price on the BSE. If the offer is fully subscribed, the government stands to sell over 82.22 crore shares, garnering close to Rs 31,000 crore for the exchequer, making it one of the largest stake sales in recent years. DIPAM Secretary Arunish Chawla confirmed the structure of the offer in a post on social media platform X. 

The stake sale is aimed at helping the government meet the minimum public shareholding norms, which require it to bring down its holding in LIC to ensure a public float of at least 10 per cent by May 2027. The government currently holds the vast majority of the insurer, having previously divested a 3.5 per cent stake through LIC’s initial public offering in May 2022, which had raised close to Rs 21,000 crore. LIC’s market capitalisation stood at over Rs 5.3 lakh crore ahead of Tuesday’s fall, making it one of the most valuable listed companies on Indian exchanges. Investors will track subscription levels among institutional and retail investors, the final allotment price, and the stock’s reaction to the discount versus its recent closing price on the BSE and NSE. 

Source: 

• https://www.nseindia.com/get-quote/equity/LICI/Life-Insurance-Corporation-Of-India