Mumbai: Insurance companies have been the biggest buyers of equity in 2010. Life Insurance Corp. of India (LIC) has invested nearly Rs7,000 crore since January, chairman T.S. Vijayan said in an interview.
He also spoke of the insurer’s investment plans, and discussed its aggressive bidding at state-run power utility NTPC Ltd’s follow-on public offer (FPO), which has sparked claims that the government was using LIC to lure other institutional investors to its divestment programme. Edited excerpts:
Aggressive plan: LIC chairman T.S. Vijayan. PTI
How much money has LIC put in the equity market since 1 January?
From April (2009) to January, our total investment is to the tune of Rs51,000 crore in the markets... January onwards, we have put in around Rs7,000 crore.
Do you have a target in mind for the fiscal year?
I think we will be investing around Rs5,000-10,000 crore more in this financial year in the markets. Of course, it depends upon our premium flow and availability of good shares and good valuations.
Have you put in a bid for Rural Electrification Corp.’s (REC) FPO?
REC is still going on... We will take a decision at the appropriate time.
Why did you bid so aggressively on day one of NTPC’s FPO, when you could have easily waited?
Yes, true we could have chosen to wait for it. We thought we would bid at around 1% more than the prevailing market rate at the time. But I think we have made a good decision because we have got around 20 crore shares from that issue.
In NTPC-like issues, we would never have got this type of shades in an open market even for a longer time. So this FPO gave us a very good opportunity to corner a large chunk of shares. I think our policyholders will be very happy with the decision taken in the long run.
How many shares of NTPC does LIC now hold?
We have about 6% in NTPC.
State-run NMDC Ltd will go for an FPO soon, while United Bank of India will also come up with an initial public offering. Will most of your planned investment for this fiscal be deployed in divestment then?
Disinvestment does give an opportunity depending upon the valuation of the company. I look at disinvestment as a process where government is diluting the stake and people are getting an opportunity to participate in the growth and prosperity of the company. What LIC deploys is the savings of its entire 25 crore-plus policyholders. If it gives them an opportunity to participate in the growth and prosperity of the company, it should be good.
Are you under pressure from the government to play the role of a market maker for these large divestment exercises, where your presence can bring in more institutional investors?
What we are investing is policyholders’ money. We have to keep the interest of the policyholders, we are trustees of policyholders’ money. We have to keep the interest of policyholders in mind to put in money in any of these issues. That is our primary concern.
But investment bankers criticized how LIC created a vast gap between its bid and others, including major domestic names such as UTI Mutual Fund, at the NTPC FPO.
I am not sure whether some people are feeling jealous that we are putting this type of money. But let me tell you that the policyholders, on whose money we are investing, should be happy with our decision.
What have premium flows been like in January-February, which is the busy season for you?
If I look at the year-on-year basis, we have set a target of Rs1,76,000 crore for the entire year. We are on path, we have collected nearly Rs1,30,000 crore till January-end. With the new premium also, it is quite good, around Rs49,000 crore has come from new premium till January.
How is LIC approaching the Budget? Have you decided to keep some money handy, or do you remain largely invested?
We take comments of all the analysts and economists and do what we want to do.