MUMBAI/NEW DELHI: The govt is selling up to 6.5% in LIC, currently worth nearly Rs 35,000 crore ($3.7 billion) through the offer for sale (OFS) route that will be launched on Tuesday and close on Wednesday. The base offer is for 2.5% of the life insurance major’s total equity capital with a green shoe option for another 4%, the insurance giant said in a disclosure to the exchanges.The shares are being offered at a base price of Rs 382 per share, a 10% discount to the stock’s Monday close at Rs 424 on BSE. If the 6.5% stake that the govt is offering is fully sold through the offer, the govt would get about Rs 31,400 crore. This will make the issue the largest OFS for divestment in India.The stake sale will help LIC meet the minimum public shareholding (MPS) norm ahead of schedule, DIPAM secretary Arunish Chawla said in a post on X. Currently, public shareholding in the life insurance major is at 3.5%, which, post a successful closure of the OFS, would go up to 10%, meeting Sebi’s MPS norm. “This (govt’s stake sale) will help achieve MPS milestones ahead of schedule,” DIPAM secretary said. In the OFS, while non-retail investors will be allowed to bid on Tuesday, the first day of the offer, retail investors will be able to bid on the last day.Under the base offer, the govt is selling 31.6 crore LIC shares, representing a 2.5% stake, the exchange disclosure said. The govt has offered to sell another 50.6 crore shares of the life insurance major, representing a 4% stake, in case initial demand for LIC surpasses the quantity offered through the base offer, it said.In May, LIC — whose IPO was seen to be overpriced — had given a 1:1 bonus offer. If the move goes through, as planned, the govt’s disinvestment kitty will swell from the current Rs 21,000 crore to around Rs 52,000 crore. And, along with the Rs 6,367 crore generated through asset monetisation, the Centre would have mopped up close to Rs 60,000 crore, against its full year target of Rs 80,000 crore.With IDBI Bank stake sale gathering momentum, the govt appears on course to meet the target and surpass it, helping it meet some of the additional funds needed to pay higher fuel and fertiliser subsidy, without losing sight of fiscal deficit, which is budgeted at 4.3% of GDP.
