Government plans to sell 2% stake in LIC, could raise Rs 10,000 crore

The government is mulling a fresh stake sale in Life Insurance Corporation of India (LIC) for Rs. 10,000 crore, as New Delhi looks to raise public stake in the country’s largest insurer amid profitability and a strong product mix, people familiar with the matter said.

The Center plans to sell up to 2% stake in the government-run insurer through an offer-for-sale route, likely in late June or early July, mainly to institutional investors, officials familiar with the discussions told ET.

“The government may dilute the stake up to 2% depending on market conditions. No timeline has been set,” said an official aware of the development. Another person said the transaction could also take place in the second quarter of FY27 if the equity market conditions turn volatile. The government needs to offload 6.5% stake in LIC to meet the mandatory 10% public shareholding requirement by May 16, 2027.

The proposed sale would mark the government’s first follow-on divestment in LIC after its landmark initial public offering in 2022, when the Center sold a 3.5% stake and raised around Rs. 21,000 crore was collected. The share price was Rs 949 per share.

Merchant bankers for the transaction were appointed last year for a three-year mandate. The Department of Investment and Public Asset Management (DIPAM) selected Goldman Sachs, Motilal Oswal Investment Advisors, BNP Paribas and IIFL Capital Services to manage the share sale process.

Government this financial year from asset monetization Rs. A budget of 80,000 crores has been kept. With IDBI’s stake sale declining, LIC’s stake sale could help raise some revenue towards the target. Finance Minister Nirmala Sitharaman has said that the government will go ahead with the sale of IDBI’s stake.

The timing and final size of the stake sale will depend on market sentiment and investor appetite, officials said.

The move comes at a time when LIC has reported strong earnings growth and significant improvement in margins due to its sharp focus on high-margin non-participation products post-listing. Non-par products, where policyholders do not share in the insurer’s excess profits, now contribute over 35% to LIC’s individual business portfolio.

The move has helped the insurer narrow the profitability gap with private peers. LIC’s value of new business (VNB) margin increased by 360 basis points year-on-year to 21.2% in FY26.

The insurer reported a 19.25% rise in profit after tax to Rs 57,419 crore for the year ended March 2026, as against Rs. 48,151 crores.

Despite operational improvements, LIC’s share performance has been volatile. After debuting below the issue price in May 2022 and remaining under pressure for nearly two years, the stock quickly recovered in early 2024, surpassing its IPO price and trading at around Rs. reached a high of 1,185. After that in March this year it fell to Rs. 722 happened. Since then, the share price has recovered. On the BSE on Wednesday, the stock fell 2.95% to Rs. 829.90 while the benchmark index fell 0.48%.