The Central Government has announced a major disinvestment move by launching an Offer for Sale (OFS) for up to 6.5% of its stake in Life Insurance Corporation of India (LIC). The floor price has been fixed at ₹382 per share, offering investors an opportunity to buy shares of India's largest insurer at a price below the previous market close.

The OFS opens for non-retail investors on August 4, 2026, while retail investors can place their bids on August 5, 2026.

Government to Sell Up to 6.5% Stake

Under the OFS, the government plans to initially sell 2.5% equity, with an additional 4% green shoe option that can be exercised depending on investor demand.

If the entire 6.5% stake—around 82.22 crore shares—is sold at the floor price of ₹382 per share, the government could raise nearly ₹31,000 crore through the transaction.

Floor Price Set at ₹382

The floor price of ₹382 per share is around 10% lower than LIC's previous closing price of ₹424.35 on the BSE, making the offer attractive for investors looking to enter the stock.

The discounted pricing is expected to encourage wider participation in the OFS.

Why Is the Government Selling LIC Shares?

The stake sale is part of the government's broader disinvestment strategy and is also aimed at helping LIC meet SEBI's minimum public shareholding norms.

At present, the government owns 96.5% of LIC. SEBI has granted the insurer time until May 16, 2027, to increase public shareholding to at least 10%.

By reducing its stake now, the government is moving closer to meeting that regulatory requirement ahead of the deadline.

A Look Back at LIC's IPO

LIC made its stock market debut in 2022, when the government sold 3.5% of its stake through one of India's biggest initial public offerings.

Since then, the government has continued its phased disinvestment strategy to gradually increase the number of LIC shares available for public trading.

What Could Be the Impact on LIC Shares?

Large OFS transactions often lead to short-term volatility because a significant number of additional shares enter the market.

However, analysts generally believe that increasing public shareholding improves stock liquidity over the long term, making it easier for investors to buy and sell shares.

The availability of additional LIC shares may also benefit investors who missed the IPO or were waiting for an opportunity to purchase the stock at a lower price.

What Should Retail Investors Know?

Retail investors can participate in the OFS on August 5. The discounted floor price of ₹382 offers a fresh entry point for those interested in investing in LIC.

As with any equity investment, investors should evaluate the company's fundamentals, long-term prospects, and their own financial goals before making an investment decision.