LIC granted 3 year extension by SEBI for 10% public shareholding: Relief for investors

LIC, as per a regulatory filing, has been granted an additional three years by SEBI to achieve a 10% public shareholding, extending the deadline to May 1, 2027. This postponement provides relief to investors by delaying a potential oversupply from a government offer for sale (OFS) to meet minimum public shareholding (MPS) norms, prompting a 3% surge in LIC's stock to Rs 962. SEBI mandates listed companies to maintain a 25% public float, with newly listed ones given a three-year grace period, extending to five years for those with a post-issue market capitalisation exceeding Rs 1 lakh crore.

Despite the Indian government owning 96.5% of LIC through the President of India, the IPO in May 2022 saw a 3.5% stake sold for around Rs 21,000 crore, making it India's largest IPO. However, initial investors have seen minimal gains, as the stock trades slightly above its Rs 949 issue price. Over the past year, LIC shares surged by 69%, fueled by expectations of growth in FY25 and the prospect of increased dividends, bolstering its share price performance. Additionally, being a government entity, LIC has been a subject of political discourse, with Prime Minister Narendra Modi addressing rumours and false stories spread by the opposition about the insurance giant in February. With equity investments exceeding Rs 14 lakh crore at the end of the March quarter, LIC remains the largest domestic institutional investor on Dalal Street.

Overall, the extension of the timeline for LIC to achieve 10% public shareholding reflects a balanced approach by the Indian government and SEBI towards regulatory compliance and market dynamics. As LIC prepares for its much-awaited IPO, investors can look forward to a transparent and orderly process that aligns with the interests of all stakeholders involved.