The Life Insurance Corporation of India (LIC), the state-owned largest life insurance titan in India, announced on Wednesday that it has received a three-year extension from the Securities and Exchange Board of India (SEBI) to achieve minimum public shareholding.
Nearly two years after LIC became public, LIC said that they needed more time to achieve a minimum public shareholding of 10% according to Rule 19(2)(b)(iv) of the Securities Contracts (Regulation) Rules, 1957, i.e., within a period of five years from the date of listing. Accordingly, the revised timeline for the corporation to achieve 10% public shareholding is on or before May 16, 2027.
This development offers investors a sense of reassurance by postponing the potential risk of excess supply due to a prospective government offer for sale (OFS) in order to comply with minimum public shareholding (MPS) norms. As a consequence, LIC’s stock price rose by 3%, reaching a day’s high of Rs 962.
As ruled by SEBI, all listed companies must attain a 25% public float, but newly listed companies are granted a 3-year time period to meet this guideline. For companies with a post-issue market capitalization exceeding Rs 1 lakh crore, the timeline to comply with the 25% MPS rule is five years.
The LIC IPO remains the largest IPO in India to date, as in May 2022, the government sold a 3.5% stake in LIC through an IPO, which was wholly OFS and was noted at approximately 21,000 crores. but investors were not making much profit as it was just slightly above its issue price of Rs 949.
