LIC may get time to comply with 25% public float norm

The Life Insurance Corporation of India (LIC) is likely to get more time to comply with norms that mandate a minimum 25 per cent public float of its equity.

Top government sources told Business Today TV that LIC may require five to seven years to issue more shares to the public. Initial discussions are being held internally within the Finance Ministry on the matter.

According to the minimum public shareholding rules, a listed entity with a market cap of more than Rs 1 lakh crore must reach the 25 per cent minimum public shareholding threshold within five years of listing.

"LIC is an exceptional entity, and it may be impossible for us to abide by the norm by 2027. The appetite of investors and market sentiment need to be considered. We have to increase the float gradually," a finance ministry official said.

As per the amended Securities Contracts (Regulation) Rules, 1957, the government has the power to exempt any listed public sector company from the minimum public float requirements on a case-by-case basis.

In May 2022, the country’s largest insurer divested 3.5 per cent equity via an initial public offering. LIC was listed at an over 8 per cent discount, fetching Rs 20,557 crore for the exchequer. The scrip ended trade on Thursday at Rs 649, down nearly 22 per cent from its listing price of Rs 826.

The government was not happy with the market response, and now wants to ensure that further stake sales are well calibrated with market sentiment and investor appetite.