India plans USD 1 bn LIC stake sale in major test of market appetite

The Indian government is planning to sell up to INR 100 bn (USD 1 bn) stake in the country’s largest state-backed ins. firm to test foreign investor appetite. The government aims to offload roughly 2% of its stake in Life Ins. Corporation (LIC) of India to institutional investors between late June and early July, though the exact size and timeline remain subject to change, Bloomberg reports.

The sell-down: Amid a foreign investor sell-off, the government is putting one of India’s largest state-backed financial firms in front of investors at a time when fallout from the Iran war is weighing on market sentiment. The LIC sale would test whether the government can still draw Gulf investors to a large public-sector financial brand amid bearish market sentiment.

Float pressure: The transaction would be the government’s first major sell-down since the insurer’s IPO in 2022, when it sold a 3.5% stake and raised around INR 210 bn. The government owned 96.5% of LIC as of 31 March, leaving the public insurer with a long road to meet the 25% minimum public shareholding requirement by 2032.

Market test: The LIC sale is expected to be among India’s few large equity transactions next month as investors weigh the economic fallout from the war, as per the outlet. Higher crude prices have raised concerns over India’s import bill and broader macroeconomic fallout, while Prime Minister Narendra Modi has urged citizens to curb fuel use and limit foreign travel.

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