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INDIA BUSINESS WORLD - October 1st - October 15th - 2008
LIC RAISES STAKE IN COS DESPITE IRDA CAP
DOMESTIC insurance giant Life Insurance Corporation (LIC) has raised its stake beyond 10% in a few blue-chip companies even after the Insurance Regulatory and Development Authority (IRDA) decided to impose the 10% cap on the institution’s investment in a single company. While IRDA last week said it would give reasonable time to LIC to adhere to the investment restrictions, that, however, seems to have encouraged the latter to make quick acquisitions in select stocks where it holds less than 10% equity.
The strategy, according to market sources, could be to take advantage of beaten-down valuations to make some capital gains subsequently when market conditions improve, before reducing the stake in these companies below the IRDA-prescribed limit.
LIC has made fresh investments in companies like Siemens, PTC India, Tata Power and Cipla in which the investor now holds more than 10% of their respective equity capital.
When contacted, an LIC official said the corporation treats its strategic investments and investment by unit-linked investment plans separately. While the strategic holdings are not traded, investments by some of the funds could rise or fall. “It is possible that in some companies, the total investment would have crossed 10% in the second quarter because of increased investment by some of the Ulip funds,” said the official. The official said IRDA norms were announced in August and some of the investments could have taken place before the norms.
According to BSE data, LIC bought 97,34,113 shares of Siemens between February 6 and September 5, 2008.
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