Life Insurance Corporation of India (LIC) has got a three-year extension from the Securities and Exchange Board of India (Sebi) to comply with minimum public shareholding norms, said the state-owned company on Wednesday in an exchange filing.

Sebi’s decision allows LIC to achieve a 10 per cent public shareholding within five years from the date of listing. “The revised timeline for LIC to achieve 10 per cent public shareholding is on or before May 16, 2027,” the filing said.

The news may come as a relief to investors, as it defers the possibility of a supply overhang resulting from a potential offer for sale (OFS) by the government to meet minimum public shareholding (MPS) norms.

LIC’s stock surged by three per cent to reach Rs 962.

Sebi regulations require all listed companies to maintain a 25 per cent public float, with newly listed companies granted a three-year window. However, companies with a post-issue market capitalisation exceeding Rs 1 trillion have a five-year timeline to meet the 25 per cent MPS rule.

In December, the Finance Ministry had granted LIC an exemption from complying with the 25 per cent MPS norms until 2032, leading to a rally in the PSU insurer’s stock since then.

The government owns a 96.5 per cent stake in LIC and in May 2022, it sold a 3.5 per cent stake in LIC IPO through an offer for sale (OFS) worth around Rs 21,000 crore. Although it remains India’s largest IPO to date, the first batch of investors has seen minimal returns, with the stock trading marginally higher than its issue price of Rs 949.

LIC has been a subject of political discussions, with Prime Minister Narendra Modi accusing the Opposition of spreading false narratives about the insurance giant in February.

LIC also holds the position of the largest domestic institutional investor on Dalal Street, with its equity investments valued at over Rs 14 trillion at the end of the March quarter.

First Published: May 15 2024 | 11:56 AM IST

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