BackLIC may invest in green bonds
Patnaik said in the current investment scenario, LIC is looking to take advantage of the surge in bond yields
PremiumMumbai: Life Insurance Corporation of India (LIC), the country’s top institutional investor with more than ₹44 trillion worth of assets, plans to invest in green bonds and interest rate derivatives. “Going forward, we feel that yes, we should also subscribe to green bonds. That is the way we are looking forward to. That will be our next contribution to the society," LIC’s managing director B.C. Patnaik said while addressing the Mint India Investment Summit 2023 in Mumbai.
A green bond is a fixed income paper issued to raise money, mainly to support growth and sustainability of either climate or environmental projects, a concept that’s fast emerging as a large new investment space globally.
Patnaik said in the current investment scenario, LIC is looking to take advantage of the surge in bond yields. “LIC has been looking to lock in funds with high-yield government securities and SDLs (state development loans)," he said.
Patnaik said to ensure liquidity in the system and to facilitate legitimate capital expansion by other institutions, LIC, as an investor, is always present on the electronic bidding platform. “Whenever the banks are issuing bonds, we have a presence and we support them. We support the entire system, so that there is no liquidity crunch in the market. And I think the entire ecosystem in that lending space, people are comfortable that LIC as an institution is there. And, they can have confidence that they can raise money after following the due processes," he said.
LIC, also India’s largest life insurer with over 65% market share in terms of new business premium currently, invests from its surplus in bonds and equities to generate reasonable returns over the long term, Patnaik said.
He added that the insurer also plans to invest in interest rate derivatives, private equity and the venture capital space.
“We are not averse to that. We are very positive. All investment decisions are taken after due diligence and on the basis of available internal equity research report and after perusing market conditions," Patnaik said.“We are good investors in the equity market, but at the same time we manage the cash flows and that gives lot of comfort to the entire ecosystem," he added.
LIC has investments in around 500 listed companies and in several systemically important unlisted firms, both state-run and privately owned.
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