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LIC's investment in markets may cross Rs 2-lakh crore this year
Life Insurance Corporation of India’s (LIC) investments in shares this financial year may exceed last year’s net figure of Rs 61,000 crore, a senior official with the firm told ET.
With a record number of public issues set to hit the market this year, the insurance behemoth is thinking of increasing exposure to both the primary and secondary markets.
“Our gross investments last year were Rs 1,93,000 crore; this year, they should cross Rs 2-lakh crore. The investments will be across government securities, state and corporate debt, project loan infrastructure, equity,” said N Mohanraj, ED-investments at LIC.
Of the Rs 61,000 crore invested into the equities market in FY10, the financial institution invested a little over Rs 12,000 crore in the primary market.
“Last year, most issues came in towards the end of the year and they were still few and far between. This year, given the amount of paper that is slated to hit the market, our investments will be made accordingly,” he added.
The life insurance major, which was among the largest investors in NTPC’s follow-on public offer (FPO), has earned the unsavoury sobriquet of being a bailout agent for the government’s public issues. With the largest-ever share offering, Coal India, all set to debut in September, there are expectations that the insurance major will have to step in again if volatile markets play spoilsport.
“The word bailout is negative. For us, it’s a business decision. Considering that we make investments for the long-term, disinvestments and big-ticket IPOs present good opportunities. Also, we purchases such large blocks in the open market as it would push up prices,” Mr Mohanraj told ET. He, however, added that their investment into equities would depend on the flow of premium, particularly from unit-linked insurance plans.
He dismisses concerns over a liquidity strain on the balance sheet and maintains that the investments are from the pure surplus available for investment and not from sale of assets.
Even as Dalal Street is abuzz with talk of around Rs 40,000 crore being raised through the divestment strategy of the government in the year FY11, industry observers are not convinced of the same.
“There is every possibility, given the current market conditions that PSU issues could be scaled down by at least 25% from what was initially proposed,” a person familiar with the matter told ET. There is also the perception that if Coal India hits the market only by September, it would demand that other PSU issuances be staggered, as quite a bit of liquidity will be sucked out of the system post Coal India’s debut. “There would be very little appetite if the issues are pushed out in succession,” added the official.
Life Insurance Corporation of India’s (LIC) investments in shares this financial year may exceed last year’s net figure of Rs 61,000 crore, a senior official with the firm told ET.
With a record number of public issues set to hit the market this year, the insurance behemoth is thinking of increasing exposure to both the primary and secondary markets.
“Our gross investments last year were Rs 1,93,000 crore; this year, they should cross Rs 2-lakh crore. The investments will be across government securities, state and corporate debt, project loan infrastructure, equity,” said N Mohanraj, ED-investments at LIC.
Of the Rs 61,000 crore invested into the equities market in FY10, the financial institution invested a little over Rs 12,000 crore in the primary market.
“Last year, most issues came in towards the end of the year and they were still few and far between. This year, given the amount of paper that is slated to hit the market, our investments will be made accordingly,” he added.
The life insurance major, which was among the largest investors in NTPC’s follow-on public offer (FPO), has earned the unsavoury sobriquet of being a bailout agent for the government’s public issues. With the largest-ever share offering, Coal India, all set to debut in September, there are expectations that the insurance major will have to step in again if volatile markets play spoilsport.
“The word bailout is negative. For us, it’s a business decision. Considering that we make investments for the long-term, disinvestments and big-ticket IPOs present good opportunities. Also, we purchases such large blocks in the open market as it would push up prices,” Mr Mohanraj told ET. He, however, added that their investment into equities would depend on the flow of premium, particularly from unit-linked insurance plans.
He dismisses concerns over a liquidity strain on the balance sheet and maintains that the investments are from the pure surplus available for investment and not from sale of assets.
Even as Dalal Street is abuzz with talk of around Rs 40,000 crore being raised through the divestment strategy of the government in the year FY11, industry observers are not convinced of the same.
“There is every possibility, given the current market conditions that PSU issues could be scaled down by at least 25% from what was initially proposed,” a person familiar with the matter told ET. There is also the perception that if Coal India hits the market only by September, it would demand that other PSU issuances be staggered, as quite a bit of liquidity will be sucked out of the system post Coal India’s debut. “There would be very little appetite if the issues are pushed out in succession,” added the official.
