Life Insurance Corporation of India’s (LIC) investments in equities during the current fiscal have already crossed Rs 50,000 crore which is more than its equity investments of around Rs 45,000 crore in the whole of 2008-09. According to LIC chairman TS Vijayan, the corporation is likely to end the year with a total investment in excess of Rs 2,00,000 crore.
The life insurance major, which was among the largest investors in NTPC’s follow-on public offer (FPO), is looking forward to make additional investments in other PSU public issues. “We feel that we have got a very good deal in NTPC, because purchases of such a size we will never be able to make in the open market. Considering that we need to make investments for the long-term, such big deals are good opportunities for us.”
“When we are making investments of around Rs 50,000 crore, single deals of Rs 1,000 crore make sense,” said Mr Vijayan. He added that the corporation would be aiming for a good chunk of Rural Electrification Corporation’s (REC) offer as well. REC is looking at raising close to Rs 4,000 crore through an FPO later this month.
“Disinvestments and big-ticket IPOs are a good opportunity. In small IPOs, which are oversubscribed several times, we get a very small quantity of what we have bid for. If it is a large issue that’s oversubscribed once or twice, it’s good for us,” said Mr Vijayan.
“Our gross investments during the current year so far are close to Rs 1,64,000 crore. In the next two months, this number should go up to Rs 2-lakh crore,” said Mr Vijayan. Of the investments made during the year so far, the corporation has pumped in Rs 51,000 crore in equities and an additional Rs 52,000 crore in central government securities.
The remaining funds were invested in state government, infrastructure and other securities.”
According to Mr Vijayan, if the corporation made investments of such a scale through the market, it would result in distortion of prices. “The increase in investments is a sign of our business growing. Our total premium till January this year has gone up 18% to Rs 1,29,000 crore. Of this, the new business premium (first year premium) is around Rs 33,000 crore,” said Mr Vijayan.
Mr Vijayan said that with a large chunk of premium coming into unit-linked plans, the corporation had no choice but to invest in the market. Last year, the corporation got a good opportunity to invest in the days that followed the global financial crisis. The market value of these investments has soared substantially since then.
The market value of LIC’s investments has crossed Rs 11,00,000 crore in end-January compared to Rs 10,76,000 in December ‘09. At the beginning of the fiscal, it was around Rs 8,98,000 crore. According to Mr Vijayan, the increase in the size of its equity portfolio also gives the corporation more headroom to invest in sectors and individual companies.