LIC receives 3-year extension to meet public shareholding norms
What's the story
The Securities and Exchange Board of India has granted the Life Insurance Corporation of India (LIC), the country's largest life insurer, a three-year extension to meet the 10% public shareholding requirement. The new deadline for LIC is now May 16, 2027, as announced by the company. This development comes nearly two years after LIC became a publicly-traded entity.
Market response
LIC stock rises following extension announcement
Following the announcement of the extension, LIC's stock experienced a significant increase. It closed 6.3% higher at ₹989.80 in today's session. Currently, the public shareholding in LIC is at 3.5%. To meet the minimum shareholding requirement of 10%, the government will need to divest an additional 6.5% over the next three years. This is in line with public shareholding norms that mandate a minimum public float of at least 25% for all listed companies.
IPO overview
LIC's IPO was largest in India
LIC's initial public offering (IPO) in May 2022 marked the largest IPO in the country, with the government divesting a 3.5% stake through a ₹21,000-crore issue. However, LIC's market debut was less than impressive as it listed at ₹867, a drop of 9% from the upper price band of ₹949. The shares continued to decline by as much as 26% from its listing price until November 2023 when it began to recover.
Financial upswing
LIC's financial performance and share price recovery
LIC's share price crossed its issue price for the first time on January 30, following approval from the Reserve Bank of India to increase its stake in HDFC Bank. On February 8, LIC reported a significant increase in net profit for the October-December quarter of financial year 2023-24. The insurer saw a year-on-year rise of 49%, amounting to ₹9,441 crore, marking a positive turn in its financial performance.