India’s plan to sell more shares in its insurance giant was no secret. But the government surprised the market by how much it raised and the pace of the deal.
Keeping details closely held until the final hours—even from some advisers—and moving quickly allowed the government to more than double its offer for sale (OFS) of Life Insurance Corp. of India (LIC) shares, raising $3.3 billion. That’s the nation’s biggest secondary offering through a stock exchange.
Officials in the state divestment department kept the LIC OFS launch date a secret to prevent traders from taking positions ahead of the sale and pushing the stock lower before the government could sell its shares, according to people familiar with the matter. Even banks advising on the deal were told at different times, with one learning about the decision shortly before informing the stock exchanges on Monday, the people said.
Hours before the LIC OFS was launched, one of the four bankers advising on the deal was summoned to the divestment department’s office in New Delhi without being told why, one of the people said. There, officials said that the LIC stake sale would start that evening and asked the banker to prepare the exchange filing. Only the core team knew, with the remaining advisers brought in after the close of market hours, the person said.
The LIC OFS also stood out because none of the advisers charged an advisory fee, the people said. During the request-for-proposal process, one investment bank agreed to work for free, which ultimately led to all four forgoing the fees, they added. Investment banks in India often accept only symbolic fees in government-linked deals as they vie for prestige, league-table credit and long-term relationships.
The timing was also carefully chosen.
Most market players had expected the sale to take place only after LIC was due to announce its quarterly earnings on Thursday. Officials brought it forward to get ahead of expectations, according to the people. The officials and bankers believed that keeping investors guessing would help keep the stock price stable.
A DIPAM representative didn’t respond to a request for comment.
Following advice from its bankers, the government chose to sell an initial 2.5% stake while keeping an option to boost the size by another 4% in case of strong demand, the people said. The smaller base portion increased the chances of the deal being fully subscribed, an important signal for large investors, they said.
The bet paid off. The base portion of the LIC OFS was subscribed 3.32 times by institutional investors on Tuesday, prompting the government to exercise the oversubscription portion. The retail portion, which closed Wednesday, was subscribed 69%, according to stock exchange data.
Overall, the transaction was subscribed 1.2 times.
LIC’s public shareholding will rise to 10% after the OFS, meeting the threshold required by India’s market regulator well ahead of the May 2027 deadline.
