LIC, IDBI stake sales expected to help Centre surpass FY26 disinvestment target

The 3 percent Offer for Sale (OFS) in LIC aimed for Q4 FY26

The Centre’s disinvestment drive for FY26 is expected to be anchored by two major transactions – a 3 percent stake sale in Life Insurance Corporation of India (LIC) and the strategic disinvestment of IDBI Bank – which together could fetch up to Rs 80,000 crore, significantly exceeding the Union Budget 2025’s target of Rs 47,000 crore for miscellaneous capital receipts.

"At least this year, DIPAM will complete the IDBI strategic sale. The receipts will come from that in this year. That much is certain. There is no need to worry about receipts. It is a big amount. It will be Rs 40,000–50,000 crore," a senior government official told Moneycontrol. The official added that this amount alone would be sufficient to meet the Budget target, which now includes both disinvestment and asset monetisation proceeds under the miscellaneous capital receipts head.

The 3 percent Offer for Sale (OFS) in LIC aimed for Q4 FY26 is estimated to yield Rs 20,000–30,000 crore. “Three percent offloading in LIC will be enough. It will be around Rs 20,000–30,000 crore. It will exceed the total target,” the official said, indicating strong confidence in the Centre’s ability to tap into market appetite for blue-chip public sector stocks.

The Department of Investment and Public Asset Management (DIPAM) has high expectations from these transactions, viewing this year’s pipeline as “very high quality”, helped by a favourable market window and the availability of “low-hanging fruit”. “LIC OFS plus IDBI strategic sale in FY26, this time it will be very high quality," the official added.

The momentum for FY26 has already begun with the successful OFS of Mazagon Dock Shipbuilders Ltd (MDL) garnering Rs 3,673.42 crore. OFS transactions for other public sector companies, including Coal India and LIC, are also in the pipeline. Rail Vikas Nigam Ltd (RVNL) and Garden Reach Shipbuilders & Engineers (GRSE) may also be in the line for an OFS in the financial year 2025–26, government sources said.

In a shift from previous years, the Union Budget 2025 did not set a standalone disinvestment target. Instead, it consolidated the expected earnings from disinvestment and asset monetisation into a single line item – “miscellaneous capital receipts” – pegged at Rs 47,000 crore.

Miscellaneous capital receipts in the Union Budget refer to non-debt capital receipts that include disinvestment of public sector undertakings and proceeds from asset monetisation. From FY25 onwards, the government stopped bifurcating disinvestment receipts and instead began clubbing all such capital inflows under this broader head to allow for more flexibility in fiscal planning.

The strategic sale of IDBI Bank, a long-pending transaction being jointly handled by DIPAM and the Reserve Bank of India (RBI), has reached advanced stages. It involves the divestment of a combined 60.72 percent stake held by the government and LIC to a strategic buyer, with the due diligence process nearly complete, according to officials familiar with the matter.

While the previous fiscal saw modest disinvestment proceeds of around Rs 30,000 crore, officials are optimistic that the high-value transactions in FY26 will provide a strong fiscal cushion.