The government is expected to start roadshows within the next two weeks to prepare for selling a part of its stake in Life Insurance Corporation of India (LIC), CNBC-TV18 reported.
The first round of divestment could involve selling 2.5 per cent to 3 per cent of LIC’s shares. Investment banks Motilal Oswal and IDBI Capital are likely to be appointed as managers for the offer for sale (OFS). The final size and pricing of the first tranche will be decided after the roadshows, the report said.
The sale is estimated to bring in between ₹14,000 crore and ₹17,000 crore for the Centre in the first tranche. At present, the government holds a 96.5 per cent stake in LIC.
The Securities and Exchange Board of India (Sebi) has given LIC until May 16, 2027, to raise its public shareholding from the current 3.5 per cent to at least 10 per cent.
Q1 performance for LIC
Earlier this month, LIC posted a 5 per cent year-on-year rise in its first-quarter profit, supported by higher premiums from policy renewals. Profit after tax rose to ₹10,987 crore for the April-June quarter, compared to ₹10,461 crore in the same period last year.
Net premium income increased by nearly 5 per cent to ₹1.19 trillion, helped by a 6 per cent jump in renewal premiums. The value of new business (VNB), which shows expected profit from new policies, grew by 20.75 per cent year-on-year, while the VNB margin improved to 15.4 per cent from 13.9 per cent.
LIC enters bond FRA space
LIC has made its debut in the forward rate agreements (FRA) segment for bonds, executing deals with more than 10 major lenders, including both Indian and foreign banks.
According to market experts, LIC’s participation in this space could lift demand for long-term government securities (G-Secs). However, they caution that it might also lead to narrower forward spreads, potentially reducing profit margins for other market participants.
The insurer also indicated that it will soon begin trading in bond forwards.
Bond FRAs allow insurance companies to secure future interest rates on government bonds, serving as a hedge against declining interest rates that could pressure their long-term liabilities, particularly for non-participating insurance policies.
