Why LIC Share Price Is Climbing Over 6% Today

Life Insurance Corporation (LIC) of India shares were on the rise on Friday after the insurer was granted a special shareholding exemption from the government.

What Happened: The government has extended a special allowance to Life Insurance Corporation of India (LIC) concerning its minimum public shareholding (MPS), allowing the state-owned insurer to achieve 25% within a decade.

LIC, India’s largest insurer, entered the stock market in May 2022, with the government selling over 22.13 crore shares, equivalent to a 3.5% stake, through an Initial Public Offering (IPO).

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Presently, the government retains a significant 96.5% stake in LIC. In a recent stock exchange filing, LIC disclosed that the Department of Economic Affairs has granted a “one-time exemption to LIC to achieve 25% MPS within 10 years from the date of listing, i.e., until May 2032.”

Why It Matters: Earlier in the year, the government amended regulations, stipulating that listed state-run entities, including banks, wouldn’t be compelled to meet the 25% MPS requirement even after privatisation, if deemed in “public interest.”

This exemption, originally limited to government-controlled companies, was expanded through a January notification, enhancing the appeal for investors eyeing state-run enterprises. In July 2021, the government had declared that all listed public sector units would be exempt from MPS regulations.

Price Action: LIC’s share price was up 6.03% at ₹810.60 near the start of trade on Friday.

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