Life Insurance Corporation (LIC) on Wednesday said it has received a three-year extension from the Securities and Exchange Board of India (Sebi) to fulfil the minimum public shareholding (MPS) rule of 10 per cent.
The insurer, in which the public holds 3.5 per cent, can now meet the MPS rule by May 2027. It was due to sell additional shares by this month itself, if there was no extension.
The government would then have to come up with an offer for sale (OFS) for 6.50 per cent of its equity or more than 41 crore shares.
The announcement triggered a rally in the insurer’s shares on the stock exchanges as concerns over the availability of more shares in the future have receded.
The minimum public shareholding rule states that newly listed companies must have 25 per cent shareholding in three years.
Sebi allowed LIC to have 10 per cent MPS but within two years of listing. LIC was listed in May 2022.
"Securities and Exchange Board of India vide its letter dated May 14, 2024, has conveyed its decision, to grant additional time of three years to Life Insurance Corporation of India to achieve 10 per cent public shareholding... i.e., within a period of 5 years from the date of listing,” LIC said in a regulatory filing.
Accordingly, the revised timeline for the corporation to achieve 10 per cent public shareholding is on or before May 16, 2027, it added.
The announcement led to its shares ending at ₹989.80 on the BSE, a gain of 6.31 per cent or 58.75 over the last close.
On the NSE, it settled at ₹994.50, marking a rise of 63.50 or 6.82 per cent.
The rally led to ₹37,159.36 crore being added to its market cap, which touched ₹6.26 lakh crore.
In December 2022, LIC said it has 10 years to meet the 25 per cent MPS.
The Department of Economic Affairs has decided ‘in the public interest’, to grant a one-time exemption to achieve 25 per cent MPS within 10 years from the date of its listing, according to the insurer.
The government sold over 22.13 crore shares or a 3.5 per cent stake in LIC through an initial public Offering (IPO) which fetched the Centre ₹20,557 crore. The price band of the issue was ₹902-949 a share.
