Monday, September 19, 2011

LIC set to foray into venture capital biz

Mumbai: Diversifying its operations further the state owned Life Insurance Corporation (LIC), with over R12 lakh crore assets, has decided to participate in infrastructural debt funds (IDF) and to foray into the venture capital business.

While sorting out the technicalities with the segment regulator Insurance Regulatory and Development Authority (Irda) on infrastructural debt funds, the life insurance behemoth is launching a R500-crore venture capital fund.
Confirming the development, DK Mehrotra, acting chairman, LIC, said, “We will launch a R500 crore venture capital fund in the next few days, through our housing subsidiary LIC Housing Finance, with a focus on infrastructure.”
VK Sharma, chief executive officer, LIC Housing Finance (LICHFL), said the LICHFL venture capital fund, to be headed by Arun Goel,would raise the money over a month from banks, high net worth individuals and institutions.
“The venture capital’s focus will be to invest primarily in urban real estate and infrastructure. If the need arises, we may look at partnering with someone in future.’’
On the infrastructural debt fund Mehrotra said, “We want to participate, but the regulator has to agree to our picking up a stake of more than 10%. We are in talks with the regulator to be able to more.”
Mehrotra said LIC has not been able to fulfil its mandated 15% investments funds in the infrastructure sector having invested only 13% during 2010-11 due to lack of opportunities.
The finance ministry which finalised the guidelines for IDFs in June this year, allowed IDF to be set up either as a trust regulated by capital market regulator Securities and Exchange Board of India (Sebi) or as an non-banking financial company (NBFC) regulated by Reserve Bank of India.
A trust-based infrastructural debt fund would normally be a mutual fund. LIC has three subsidiaries — LIC Mutual Fund , LIC HFL and LIC Pension Fund.

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