LIC equity offload via green shoe option pressures market, shares down near 8%

Delhi – On Tuesday, Life Insurance Corporation of India's (LIC) equity fell close to 8 percent after the government revealed an Offer for Sale (OFS) that includes a green‑shoe option. By 12:00 pm IST, the stock was quoted at INR 396 on the NSE, reflecting a 7.54 percent decline, with intraday peaks at INR 402.40 and troughs at INR 390.50.

The centre plans to issue a base offer covering 2.5 percent of LIC’s paid‑up equity, while retaining the right to sell an extra 4 percent through the green‑shoe mechanism. Should the option be fully exercised, the government could offload up to 6.5 percent of the insurer, generating up to INR 31,000 crore.

The OFS floor price of INR 382—about 11 percent lower than the last closing price—added to market anxiety. Traders cited the discount and the anticipated influx of shares as reasons for the sustained sell‑off. The OFS was opened to non‑retail participants on Tuesday and will be opened for retail investors on Wednesday.

The transaction also serves to raise LIC’s public float, aligning the company with SEBI’s requirement that the government’s share be reduced to 90 percent by May 2027.