LIC To Pump In Rs 10000 Crore In Bourses by March End (17-Feb-2010)
With an objective to close the yearly equity investment at higher level, Life Insurance Corporation (LIC) of India is eyeing to pump in around Rs. 10,000 crore in the stock Market by the end of the current financial year, taking its annual equity investment to Rs. 60,000 crore during this financial year.
Mr. N Mohanraj, Executive Director (investment operations) of LIC said the company’s investment in the equity market has so far already crossed Rs. 50,000 crore and it expects to close the current financial year with an investment of Rs. 55,000-60,000 crore.
Last financial year, LIC has invested Rs. 40,300 crore in the equity market.
On further prodding about investments details, Mr. Mohanraj said it is sector agnostic and spread across many companies.
Moreover, LIC is also participating in the primary market by investing in Follow-on Public Offer (FPO) by public sector companies.
LIC was among the largest investors in FPO of NTPC and also it would bet in other PSU public offers.
Mr. Mohanraj said the company would be looking for a good portion of Rural Electrification Corporations (REC) offer.
This month, REC is looking at raising nearly Rs. 4,000 crore through a FPO. The company plans to sell 17.17 crore shares through the FPO, which will constitute 17.39 % of its fully diluted post-issue capital.
Fresh issue of 12.87 crore equity shares and an offer for sale of 4.29 crore shares, would be include in the issue.
Also, the investment is linked to the collection of premium. If the premium towards equity linked ULIPs increases, then the investment in the equity market will also goes up.
Last month, Reliance Industries disclosed that, over the last 2 years through open market transactions, LIC has increased its stake in RIL to 6.94 %.
LIC has surged its stake in RIL to 6.94 % from 5 % for Rs. 6,182 crore. The transactions were done between 27th of May 2008 and 4th of January 2010.
As of now, LIC holds 22.69 crore shares of RIL representing 7.33 % voting rights in the company.
However, Insurance Regulatory and Development Authority (IRDA) does not allow insurers to hold more than 10 % stake in any firm, leading to market speculations that the state-run insurer might be asked to pare its existing stakes.
The IRDA has not asked LIC to pare it down. It may do it for commercial reasons in future.
Where, in terms of premium collection, the market share of LIC among 23 players in the sector jumped more than 65 % at Rs. 44,178 crore during the first 9 months of the current financial year, from Rs. 29,457 crore during the same period last financial year.
Meanwhile, LIC aims to achieve Rs 3550 crore of premium collection in 2009-10 in the eastern central zone that comprises the states of Orissa, Bihar and Jharkhand.
The premium collection target of Rs 3,550 crore is 35.71 per cent more than Rs 2660 crore, which the company had achieved in the zone in the previous financial year.
The life insurer have already collected premium worth Rs 2,100 crore till January 2010 and it expects to achieve Rs 3,550 crore of premium collection by this fiscal end, said Basavaraju, zonal manager of LIC''s eastern central zone.
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