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Indian government has granted a concession to the Life Insurance Corporation of India (LIC), allowing the insurer to achieve a 25% Minimum Public Shareholding (MPS) within 10 years. LIC, country’s largest insurer, went public in May 2022. During the IPO, government sold a 3.5% stake through an Initial Public Offering (IPO). Currently, the government holds 96.5% stake in LIC.
Today, LIC shared in a stock exchange filing that the Department of Economic Affairs has given them a one-time exemption. LIC has to reach the 25% Minimum Public Shareholding (MPS) requirement in this extended time by May 2032. This exemption is part of a new rule allowing state-run companies, including banks, to be exempted from the 25% MPS rule after privatization if it’s considered in the “public interest.
LIC, which made its stock market debut on May 17, 2022, was initially required to meet the 25% MPS rule by 2027. However, the recent government decision grants a 10-year extension, allowing LIC to achieve the stipulated MPS by May 2032.
SEBI Regulations
SEBI, the capital markets regulator, mandates that issuers with a post-issue market capital exceeding ₹100,000 crore must achieve a minimum public float. These issuers are required to achieve at least 10% public shareholding within two years and 25% within five years from the date of listing. In the last month, LIC stock has surged by 25%, and over the past six months, it has delivered a 20% return. However, the stock has given a 7% negative return since its listing. Government’s decision to grant LIC a one-time exemption provides flexibility for the insurer to meet the 25% MPS requirement by May 2032, aligning with SEBI regulations and enhancing investor appeal.
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