New Delhi, May 27 -- India is likely to begin formal marketing next month for a planned share sale in Life Insurance Corporation of India that could raise as much as 100 billion rupees ($1 billion), according to people familiar with the matter.

The government plans to sell a stake of about 2% in the state-run insurer in late June or early July to institutional investors, the people said, asking not to be identified because the information is private.

The Department of Investment and Public Asset Management, under India's Finance Ministry, is working with Goldman Sachs Group Inc., Motilal Oswal Investment Advisors Ltd., BNP Paribas SA and IIFL Capital Services Ltd. to manage the transaction, the people said.

Deliberations are ongoing an...