LIC shares sink 9% as OFS opens at 11% discount. Here's all you need to know

Shares of Life Insurance Corporation of India (LIC) tumbled nearly 9% on Tuesday as the government’s offer for sale to sell up to a 6.5% stake in the insurance behemoth opened for non-retail investors today.On Monday, LIC announced that the government plans to sell a 2.5% equity stake in the company as part of the base offer, with an additional 4% available as a green shoe option. The floor price for the OFS has been fixed at Rs 382 per share, implying nearly a 11% discount over the stock’s previous closing price of Rs 428.50 per share on NSE. The stock dropped to Rs 390.50 apiece on NSE on Tuesday morning.At the floor price, the total 82 crore shares available for the OFS, if the oversubscription option is availed, would be worth nearly Rs 31,410 crore. The offer for sale opens for non-retail investors on July 4, while retail investors can participate on July 5.LIC shareholding patternThe government owned a 96.5% stake in LIC as of June 30, 2026, according to the latest data on the company’s shareholding pattern. This makes LIC one of the largest government-owned listed companies, and the public float must gradually increase to comply with minimum public shareholding requirements. More than 20.92 lakh retail shareholders meanwhile held a 1.55% stake in the insurance behemoth.Also read | LIC OFS opens on August 4 as govt looks to sell up to 6.5% stake. Check details The Life Insurance Corporation of India (LIC) is a cornerstone of the nation's financial sector, serving as India's largest life insurer and the country's second-largest public sector enterprise by market capitalisation. Its institutional eminence is recognised both domestically and globally, with LIC ranked as the fourth most valuable brand in India and the world’s third-strongest insurance brand.Furthermore, LIC's exceptional operational scale and market penetration are exemplified by its Guinness World Record for the most life insurance policies sold within a 24-hour period, reflecting unwavering public trust and unmatched execution capabilities, DIPAM secretary Arunish Chawla said.Notably, the OFS marks the latest step in the government’s divestment efforts, following recent stake sales in PSUs like Coal India, NHPC, NLC India and more.LIC share priceLIC shares rose marginally in a week but overall recorded marginal losses in a month to close at Rs 428.50 apiece on Monday, ahead of the OFS announcement. The stock, however, is up slightly in 2026 so far.In the longer term, LIC shares have fallen more than 4% in a year, but delivered over 30% returns in three years. The insurance behemoth currently has a market capitalisation of more than Rs 5.42 lakh crore.The stake sale is expected to help LIC move faster toward minimum public shareholding milestones. Listed companies are required to maintain a minimum level of public shareholding. Since LIC was listed with the government holding a large majority stake, the public float has to rise over time.Also read | Government unveils offer for sale to dilute LIC stake(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)