Shares of Life Insurance Corporation of India (LIC) came under heavy selling pressure on Tuesday after the Central government announced an Offer for Sale (OFS) to reduce its holding in the state-owned insurance giant.
LIC shares fell as much as 7.92 per cent during intraday trade on the BSE, touching a low of Rs 390.70 around 10:40 a.m. The stock later recovered some losses but was still trading at Rs 397.80, down more than 6 per cent.
The decline followed the government’s announcement of an OFS comprising a base offer of 2.5 per cent of LIC’s paid-up equity share capital, along with a greenshoe option to divest an additional 4 per cent stake. If the entire 6.5 per cent stake is sold, the government is expected to raise up to Rs 31,000 crore.
Investor sentiment was further affected by the OFS floor price of Rs 382 per share, which is around 11 per cent below LIC’s previous closing price. The discounted pricing and the prospect of a large volume of shares entering the market weighed on the stock during trading.
The OFS opened on Tuesday for non-retail investors and will be available for retail investors on Wednesday.
The stake sale forms part of the government’s efforts to increase LIC’s public shareholding in line with the Securities and Exchange Board of India (SEBI) regulations. At present, the government owns 96.5 per cent of LIC, while public shareholders hold the remaining 3.5 per cent.
If the entire 6.5 per cent stake under the base offer and greenshoe option is sold, the government’s holding will reduce to 90 per cent, enabling LIC to meet SEBI’s minimum public shareho
FOLLOW NOW
