LIC raises stake in HDFC Bank to over 5 per cent

Country's largest insurer Life Insurance corporation of India has increased its stake in HDFC Bank to over five per cent following acquisition of shares from the open market.LIC purchased 1.6 lakh shares from the open market hiking its stake in
the company to 5.01 per cent.The equity holding of the insurer increased by 0.04 per cent from 4.97 per cent earlier.

As on June 2008, LIC holding in the bank stood at 2.15 per cent which went up to 4.7 per cent in September this year.Yesterday, LIC hiked its stake in Vijaya Bank to 9.53per cent by acquiring shares worth nearly Rs 30 crore from the open market.

Domestic institutional investor acquired over 94.29 lakh shares representing 2.18 per cent stake in the state-run lender.Before the acquisition, LIC held over 3.18 crore shares representing 7.38 per cent stake in the bank which subsequently increased to 9.53 per cent after the purchase.

LIC's investment in MF's rises 3 folds

After banks, it’s the country’s largest insurer Life Insurance Corporation of India (LIC) that has come to the aid of cash-strapped mutual funds (MFs), which are reeling under redemption pressure on liquid and fixed maturity plans (FMPs).The public-sector insurer has pumped in over Rs 14,000 crore into liquid funds of various fund houses. This is more than three times its investment of around Rs 4,500 crore in such instruments last year.

It could not be ascertained as to how much the corporation has invested in its own mutual fund arm, LIC Mutual Fund.
According to Irda norms, LIC can invest 50 per cent in government securities, 15 per cent in the infrastructure sector, and the remaining 35 per cent in other channels, including equity, mutual funds, fixed deposits, non-convertible debentures, certificate of deposits, and commercial papers.

Liquid or money market funds earn returns in the range of 10-12 per cent. LIC parks money in short- term liquid funds and FMPs, where the average tenure varies from two weeks to a month.

LIC hikes stake in select blue chips beyond 10%

Domestic insurance giant Life Insurance Corporation (LIC) has raised its stake beyond 10% in a few blue chip companies even after the insurance regulator IRDA decided to impose a cap of 10% on the institution’s investment in a single company.LIC has made fresh investments in companies like Siemens, PTC India, Tata Power and Cipla in which it now holds more than 10% stake each. Based on Wednesday’s closing, the combined value of the institution’s additional investments in these companies amounted to nearly Rs 800 crore.

According to disclosures filed with BSE, LIC bought 97,34,113 shares of Siemens between February 6 and September 5, 2008, resulting in a hike in its stake from 7.7% as on December 31, 2007 to the current 11.3%. The company’s shares have tanked nearly 30% in the past one month.PTC India and Tata Power are the two other notable examples where LIC now holds a little over 10% after acquiring additional shares in September. The stocks of these companies have lost 18% and 12% respectively in one month.

Following is a list of companies where LIC holds 10%-plus stake:
Tata Motors
Tata Steel
Corporation Bank
Ranbaxy
Cipla
M&M
Maruti Suzuki
Dr Reddy’s Labs
MTNL
HPCL
Oriental Bank
Reliance Infrastructure

LIC wants to dilute stake in IFCI

State-owned Life Insurance Corporation of India (LIC) wants to dilute its holding in IFCI even as the Delhi-headquartered non-banking finance company is awaiting cues from the government on its future strategy.


Sources said LIC has approached the IFCI management to lower its holding from 11.39 per cent to 8.39 per cent, the level it was at prior to conversion of debt into equity earlier this year.On its part, IFCI is seeking a legal opinion on how to go about the process.The sources also said the IFCI management is yet to hear from the government on the strategy it should adopt for restructuring the operations, which have been in a pause mode for almost a decade.

The NBFC has communicated the failure of the process to rope in a strategic investor to the government and also reported the apprehensions that some of the bidders had regarding the convertible bonds issued to the Centre, which helped it tide over the financial crisis. IFCI was saddled with high cost debt and was finding it tough to pay bondholders prompting the government to step in.

Read more in The Business Standartd article.

UTI likely to sell 15% in AMC to global player

UTI Mutual Fund, owned equally by Life Insurance Corporation and three public sector banks, is likely to rope in a strategic partner by offering 15 per cent equity in the Asset Management Company, ahead of its Rs 2,000 crore ($ 500 million) initial public offering (IPO).The strategic partner is likely to be an international player, having a presence in developed markets, said sources.

The strategic partner would be offered a slot on the UTI AMC board with a view to bringing in technology expertise and international knowhow, among other things.

The existing shareholders — LIC, State Bank of India, Punjab National Bank and Bank of Baroda (they are financial investors) — would be diluting a combined 20 per cent stake in the Mumbai-headquartered fund house during the IPO. Post-listing, UTI MF will become the first mutual fund house in India to be traded on the stock exchanges.

Shareholding by the four state-owned entities, which bought the entire government holding in 2005 by acquiring 25 per cent stakes each in UTI AMC, would come down to a combined 65 per cent after the strategic stake sale and IPO. They had bought the government’s stake in the fund house in 2005 for Rs 1,236 crore — a blockbuster investment considering that the AMC is currently valued between Rs 6,000 and 8,000 crore within less than three years.

UTI AMC has close to 8.5 million customers and it is the third biggest fund house (after Reliance and ICICI-Prudential MFs) with assets under management of over Rs 45,000 crore.

Read more in The Business Standard article.

UTI AMC to sell 49 pc stake through IPO

Leading mutual fund player UTI AMC on Wednesday said its board has approved a proposal to sell 49 per cent stake through an Initial Public Offer by the end of this fiscal.This will be the first-ever public offer by a mutual fund house in the country.

The four sponsor companies, State Bank of India, Punjab National Bank, LIC and Bank of Baroda, own 25 per cent stake each in UTI AMC. Post-IPO, their combined holding will come down to 51 per cent.The decision to go for an IPO was taken by the company's board at its meeting yesterday. The government had earlier cleared the IPO proposal.

The mutual fund house was formed after splitting the then UTI following a fiasco in its flagship scheme, US-64, in 2001.he proceeds of the issue will be used to fuel the company's increasing business needs.

Fin Tech buys 1% NSE stake for Rs 125cr

Software firm Financial Technologies India has acquired 4,50,000 shares (1%) stake in National Stock Exchange from ICICI Bank for Rs 125 crore.According to a release issued by Financial Technologies to the BSE today, the company joins other NSE shareholders including the New York Stock Exchange (NSE), Goldman Sachs, ICICI, SBI, IDBI, LIC and various public sector banks.

NYSE and three financial investors — General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund — had picked up 5% stake each in NSE for $490 million (Rs 2,205 crore) in January this year.That had pegged the upper-end valuation of the country’s largest bourse at $2.5 billion (Rs 11,250 crore). NSE had recorded a net profit of Rs 191 crore on a revenue of Rs 472 crore for the financial year ended March 31, 2006.
With the current FT-ICICI Bank deal, the valuation of NSE has moved up to Rs 12,500 crore - an increase of around 11% in seven months.

UTI set to open its $1 bn-plus issue

UTI Bank will hit the market next week with a $1 billion-plus equity issue. The bank will raise the money from a mix of preferential issue to promoters and fresh issues to qualified institutional buyers and GDR investors.

The bank’s capital raising plans were approved by the board, which met here on Thursday to consider the results for the first quarter and also decide on the equity expansion. Buoyed by a 70.7% growth in non-interest income, the bank announced a 45.2% rise in net profit to Rs 175 crore for the first quarter ended June 30, 2007.

The bank also decided to have a uniform price for all issues. Sources said the issue is likely to be priced at around Rs 650 per share. The bank will issue 3.19 crore shares to promoters. At Rs 650, UTI Bank will raise around Rs 2,075 crore from the preferential issue. The Special Undertaking of the Unit Trust of India (SUUTI) and Life Insurance Corporation of India have agreed to subscribe to the issue. However, some smaller subsidiaries of the General Insurance Corporation (GIC) may not subscribe to the preferential issue. The bank’s scrip closed at Rs 641.1 on the BSE on Thursday.

Read more in The Economic Times article.

Dena Bank to enter non-life insurance business

Dena Bank is in the process of forming a joint venture to foray into the non-life insurance sector along with other partners, chairman and managing director P L Gairola said on Friday.

The idea was at a conceptualisation stage and was yet to get approval of the board, Gairola told reporters on the sidelines of the Banking Conclave organised by FICCI (eastern region) here.

Dena Bank would hold 26 per cent stake in the proposed JV, he said, adding besides Dena Bank, there would be other domestic and foreign players.At present, the bank is selling products of LIC for life and Oriental Insurance for non-life.

During the current fiscal, the bank was eyeing a credit growth of 22 per cent and deposit growth of 23 per cent as compared to 27 per cent and 18 per cent respectively in the last financial year.

Gairola said that the bank was keen to maintain a capital adequacy ratio of 11 per cent during the year which at present was at 11.52 per cent.He said the bank did have headroom to raise Rs 8000 crore both in Tier I and Tier II.The bank was also in talks with State Bank of India to launch credit cards.

IDFC raises Rs2,100 cr through QIP route

The Board of state-run lender IFCI will consider a proposal on 6 July to invite preliminary bids for selling at least 26% stake to a strategic investor.Along with annual results, the board would take up the issue of inviting expression of interests (EoI) from strategic investors.

The lender has appointed management consultant Ernst & Young to look for the strategic investor. E&Y has been asked to suggest names of strategic investors and will help IFCI in carrying out modalities related with stake sale.

According to the plan, strategic investors will have to make bids within a month of the memorandum of information being made public. Following this, IFCI will shortlist some investors. These investors will be allowed to do a detailed due diligence and submit a fresh bid indicating the price they are willing to pay for the 26% stake.
Based on the second round of bids, the IFCI board will decide on the new stakeholder.
As a precusor to stake sale, IFCI had in May passed an enabling resolution to increase foreign holding in the company up to 74% of its share capital.

Foreign investors Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%) already have equity interest in IFCI.Eleven financial institutions, domestic and overseas, hold 34.8% in the company as on 31 March, which includes 8.4% and 5.01% held by LIC and IDBI respectively.

UTI Mutual Fund to go public this fiscal

The country's leading fund manager UTI Mutual Fund is likely to enter the capital market with its public issue by the end of current fiscal and has already got the approval from its board for the IPO.

"We have got in-principle approval from the four sponsors and modalities are being worked out. In another 6-8 months we would be in better position to tell about the launch time," UTI AMC Chief Marketing Officer Jaideep Bhattacharya told reporters here after launching 'India Lifestyle Fund'.

The ground work has started and various aspects were being examined, he said, adding after legal vetting merchant bankers would be appointed to carry the process further.

UTI Mutual Fund sponsors comprises State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India holding 25 per cent stake each.

Read more in The Economic Times article

UTI Bank promoters plan fresh retail issue

The Specified Undertaking of Unit Trust of India (SUUTI) and the Life Insurance Corporation (LIC), the principal promoter shareholders of UTI Bank, want the bank management to give retail investors a chance to make further investments in the bank’s growth through subscription to fresh equity shares.

UTI Bank was planning to raise $600 million through a global depository receipts (GDR) issue and a simultaneous preferential offer to its promoters, which also include the General Insurance Corporation (GIC).

The bank, at its extraordinary general meeting on June 25, deferred its capital raising plans after both SUUTI, an entity carved out of the erstwhile Unit Trust of India, and LIC asked for more time to take a call on subscribing to the preferential offer. SUUTI is the largest shareholder in the bank with 27.43 per cent stake and LIC owns 10.38 per cent of the bank.

Read more in The Business Standard article

UTI Bank puts off $600m GDR

UTI Bank, a mid-sized private sector bank, has deferred its $600 million global depository receipts (GDR) issue as well as the simultaneous preferential offer to its promoters.

The bank said the decision to put off capital raising plans was taken in order to provide promoter shareholders - Specified Undertaking of Unit Trust of India (SUUTI), Life Insurance Corporation and General Insurance Corporation - more time to take a call on subscribing to the preferential offer.

SUUTI is the largest shareholder in UTI Bank with 27.43 per cent stake. LIC owns 10.38 per cent of the bank’s equity and GIC 2.38 per cent.

In a statement released after the bank’s extraordinary general meeting (EGM) here today, UTI Bank said the special resolutions on raising capital have been deferred “to provide promoter shareholders further time for consultation” on the preferential share offer.

The shareholders would again meet on July 13 to consider the plans to raise capital. The shareholders, however, passed a resolution increasing the bank’s authorised capital to Rs 500 crore from Rs 300 crore.

Banking sources said LIC, which bid in the recently concluded ICICI Bank’s follow-on equity offer for shares worth about Rs 4,000 crore, has asked for more time to arrange for funds as it was currently experiencing a “tight liquidity” situation.

SUUTI, which has already obtained the government’s permission, also needs to arrange for funds to subscribe to its portion of the preferential offer.

Read more in The Business Standard article.

SBI, LIC, others to dilute 50% in UTI MF via IPO

UTI Asset Management Company will float an initial public offer by March-end next year to help its sponsors, SBI, LIC, PNB and BoB, offload up to 50%.

UTI Asset Management Company Ltd chairman and managing director U K Sinha told PTI that the board of the company had recently approved the proposal to offload up to 50% stake held by the four sponsors.State Bank of India (SBI), Life Insurance Corporation of India (LIC), Punjab National Bank (PNB) and Bank of Baroda (BoB), individually hold 25% stake each in the asset management firm.

Sinha said UTI AMC would probably be the first domestic mutual fund in the country to go for an IPO, through which the four sponsors would make a partial exit.He said the details on the valuation of the company were being worked out.The valuation of the firm was last done in November 2005, when the four sponsors bought stake in it.

LIC, SBI in race to manage pension funds

Public sector entities Life Insurance Corporation, UTI AMC, State Bank of India and Punjab National Bank are among the front-runners to become pension fund managers under the new pension system.

The direct and indirect foreign investment in pension funds will not exceed 26 per cent. The Pension Fund Regulatory and Development Authority (PFRDA) recently invited expressions of interest for managers. The last date to apply is May 25, 2007.

The selected sponsors will have to incorporate the pension fund as a separate public sector company in which direct and indirect foreign investment will not exceed 26 per cent.PNB is likely to have US-based Principal Financial Group as the foreign partner.

According to official sources, there will be 2-3 fund managers from the public sector as the scheme at the moment is for central and state government employees. Private fund managers are likely to be allowed after the scheme is made available to other citizens of India in due course.

According to the criteria, a sponsor to be eligible for fund manager must have at least five years of experience of fund management and average assets under management of sponsors must not be less than Rs 10,000 crore.

Read more in The Busienss Standard article.

BSE demutualised; LIC, SBI, AV Birla group pick up stakes

The Bombay Stock Exchange, Asia’s oldest, on 18 May completed a nearly two-year exercise of corporatising itself by offloading 51% of broker members’ stake to 19 investors including SBI, LIC and Aditya Birla group, besides Deutsche Borse and Singapore Exchange.

The corporatisation or demutualisation process was to have been completed by 19 May as mandated by the Securities and Exchange Board of India under the BSE (Corporatisation and Demutualisation) Scheme, 2005.Before demutualisation, 790 broker-members held 100% in the 131-year-old exchange.

The 19 investors have picked up 41% stake and the remaining 10% was sold to Deutsche Borse and Singapore Exchange (SGX), who picked up 5% each for Rs189 crore at Rs5,200 a share earlier this year.The market capitalisation of the BSE now stands at around $1 billion.

T V Raghunath, executive president, investment banking, Kotak Mahindra Capital Company, which was the exclusive financial advisor to the demutualisation process, said that a total of $500 million was collected through the stake sale.

Read more in The Live Mint article.

LIC keen on stake buys in banks

Life Insurance Corporation of India is interested in picking up stakes in banks that have good financials and performance, with the insurer likely to prefer banks with which it has bancassurance tie-ups. Bancassurance enables the insurer to distribute insurance products through a bank’s network.

D K Mehrotra, managing director, LIC, however, said that bancassurance was not the only criterion. "We pick up stakes in banks for purely commercial reasons and not strategic ones. Though we have tie-ups with over 30 banks, we are not looking at all the banks. We will look at banks that have good financials and performance,” he said.

With the company already having stakes in the UTI Bank, Corporation Bank, Oriental Bank of Commerce (OBC), State Bank of India (SBI) and City Union Bank, experts associate the insurer’s move with its interest to get into banking.

This month, LIC picked up 15,00,000 equity shares at Rs 169.15 per share in the City Union Bank, which has tied up with LIC for offering insurance-linked banking products.

According to market sources, LIC’s interest in the City Union Bank is part of its larger design to pick up stakes in small private sector banks, as it would have a greater say in the management of small banks, unlike the bigger ones such as UTI, OBC and Corporation Bank in which it has stakes. For smaller banks, a tie-up with LIC would help them raise the much-needed funds for revival, sources added.

Read more in The Business Standard article.

LIC shortlists partners for credit card venture

Life Insurance Corporation (LIC) of India has shortlisted ICICI Bank, HDFC Bank, UTI Bank, Standard Chartered Bank and Visa as partners for its credit card venture.

Apart from the shortlisted banks, the corporation may also rope in one more partner, probably Corporation Bank, to ensure that the credit card company is not a subsidiary. LIC wants to call shots in the card company, but for regulatory reasons does not want the proposed venture to be a subsidiary.

After putting its plans on the back burner for a year, LIC started moving again in 2007. Last month it appointed a chief executive Hemant Bhargava for the credit card project. Mr Bhargav had earlier headed LIC’s microfinance and international businesses.

Read more in The Economic Times article.

LIC, SBI in race to buy BSE stake

State Bank of India and Life Insurance Corporation are among the front runners to pick up stake in the Asia's oldest bourse Bombay Stock Exchange, which has to demutualise by May 19.Under demutualisation, BSE has to off-load 51% stake in the stock exchanges owned by 790 brokers. The exchange has already offloaded 10% stake to Deutsche Bourse and Singapore Exchange and 41% has to be sold by next week.

BSE has received interest from over 20 leading domestic and foreign financial institutions for offloading remaining 41% stake. The long overdue announcement of the remaining 41% stake is likely next week, a BSE official said.

BSE is keeping the names of the firms, which have applied for picking up stakes, under wraps but indication are SBI, LIC and Bank of India are among 20 firms and FIs that have applied for.

Read more in The Times of India article.

Govt exits Maruti, sells stake for Rs 2,360 cr

The government today exited the country's largest car maker Maruti Udyog by selling its residual stake for Rs 2,360 crore to a clutch of financial institutions led by Life Insurance Corporation (LIC).

The government has sold all the share held by itself for and average price of Rs 797 per share to raise Rs 2,360 crore.Maruti shares today closed at Rs 764.65 on the bourses. The government had fixed a floor price of Rs 760 for the sale.

The government had offered 2.96 crore shares in the company representing 10.27% stake. LIC got all the 1.3 crore shares it had bid for at a price of Rs 800 per share. The country's biggest insurer, which earlier held 8.1% now controls 12.5%, and has become the second-largest shareholder in the company.

In all, 32 financial institutions and mutual funds were alloted shares. State Bank of India was the second most successful bidder and got 83 lakh shares at Rs 775 per share.

Read more in the The Business Standard article.