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LIC MF Appoints Nikhil Rungta As Co-Chief Investment Officer, Equity

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LIC Mutual Fund (LIC MF) has appointed Nikhil Rungta as Co-Chief Investment Officer – Equity (Co-CIO) with effect from June 19, 2024

Rungta’s appointment assumes significance as the Co-CIO is key personnel for schemes run by the Asset Management Company. He has over 16 years of experience in the equity and capital markets segment at reputed financial organisations. 

Rungta holds an MBA (Finance) from Mumbai’s prestigious Narsee Monjee Institute of Management Studies and is a qualified Rank Holder Chartered Accountant. He is also a trained Financial Risk Management professional having certification from the Global Association of Risk Professionals, USA.

Prior to this appointment, Rungta has served as Equity Fund Manager – SBI Pension Funds. He also held various senior investment management roles such as Chief Investment Officer – Golden Myriad (Garware Group Family Office), Co-Fund Manager and Research Analyst – Nippon India Mutual Fund, Investment Manager and Research Head – BFSI – Bajaj Allianz Life Insurance Company, Lead Analyst – BFSI – Anand Rathi Shares & Stockbrokers, Equity Research Analyst – Standard Chartered Securities (India), and Equity Research Analyst – Religare Capital Markets. 

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GST Authority Fines LIC For Lower Payment of Taxes

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According to a notice from the State Taxes Officer in Srinagar dated 9 October 2023, LIC paid 12 per cent GST rather than 18 per cent on a few invoices

Life Insurance Corporation (LIC) has been fined Rs 36,844 by the GST authority for underpaying taxes, LIC said in a regulatory filing.

It also stated that company has received a communication/demand order for the state of Jammu and Kashmir’s GST collection as well as interest and penalties. The tax office has issued a demand order/ penalty notice for 2019–20, which includes interest and penalties totaling Rs 6,382 and Rs 10,462 for GST.

According to a notice from the State Taxes Officer in Srinagar dated 9 October 2023, LIC paid 12 per cent GST rather than 18 per cent on a few invoices.

The company also cleared that fine would not have any material impact on financials, operations or other corporate activities.

LIC’s poor performance persisted in the month of September as well. It reported a 27 per cent drop in new business premiums (NBP), notwithstanding growth recorded by private insurers.

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GoI, LIC Together To Sell 60.72% Stake In IDBI Bank

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Sale of 60.72 per cent stake comprises a 30.48 per cent stake of the government of India and a 30.24 per cent stake of LIC.

The government in a notification said that it is planning to sell a 60.72% majority stake in IDBI (Industrial Development Bank of India) Bank and invites expressions of interest, on Friday.

Secretary, Department of Investment and Public Asset Management in a tweet on 7 October said, “Expression of Interest is invited for Strategic Disinvestment of specified government of India (GoI) and LIC (Life Insurance Corporation) stakes in IDBI Bank along with transfer of management control. Details are at dipam.gov.in.”

State-owned LIC of India will also be reducing its holding in IDBI Bank as part of the state’s divestment process.

Sale of 60.72 per cent stake comprises a 30.48 per cent stake from the government of India and a 30.24 per cent stake from LIC. The government of India held 45.48 per cent stake in IDBI bank while LIC held 49.24 per cent at the end of June.

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LIC Stake In Dr Reddy’s Laboratories Rises To 7.7%

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Purchase of 33,86,486 shares of DRL was made between 15 June 2022 and 30September 2022 by LIC.

Dr Reddy’s Laboratories Ltd said Life Insurance Corporation of India (LIC) has increased its stake in the pharmaceutical firm to 7.7 per cent. The stake increased through purchase of 33.86 lakh shares from open market over a certain period of time, said the firm on 3 October.

Dr Reddy’s Laboratories (DRL) during a regulatory filing said that earlier LIC held around 5.65 per cent stake in the company.

Purchase of 33,86,486 shares of DRL was made between 15 June 2022 and 30September 2022 by LIC. It aggregates to 2.034 per cent stake from the open market, it added. 

Afterwards, LIC’s holding in the company stands at 7.7 per cent, it added further.

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Government May Sell 51% Of $5 Bn IDBI Bank

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As per the current composition, the government of India and the state-backed Life Insurance Corporation of India together own about 94 per cent of IDBI Bank’s shares

The government of India is considering selling at least 51 per cent of state-backed IDBI Bank, Bloomberg News reported citing people aware of the development.

As per the current composition, the government of India and the state-backed Life Insurance Corporation of India together own about 94 per cent of IDBI Bank’s shares.

The report stated that they are in talks about how much of their stakes they plan to sell and both are expected to retain a stake in the bank after the sale.

The report further stated that a panel of ministers will make the final decision on the structure of the deal and both, the government and LIC will formally seek to gauge buyer interest as soon as the end of September.

Authorities plan to sell at least some of the government and LIC’s stakes in IDBI Bank and cede management control. Reserve Bank of India will allow investors to buy a stake larger than 40 per cent, Bloomberg News has reported.

Entities governed by the regulator normally need to seek permission to buy stakes above that threshold while non-regulated firms are capped at purchases of 10 to 15 per cent.

Sebi

LIC Mutual Fund Eyes Collecting Rs 1,000 Cr

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The new money market fund is the first from the company in many years and is among the first to launch a new scheme after the three-month Sebi ban on new launches ended on July 1

LIC Mutual Fund is targeting to collect Rs 1,000 crore from its new money market fund launched on Wednesday. The new fund is an open-ended debt scheme that facilitates investing in money market instruments, it said in a statement. Nityanand Prabhu, executive director and business head of LIC MF, told PTI that it has set an internal target of garnering at least Rs 1,000 crore from the scheme during the primary subscription period. The fund, targeted mainly at corporate investors, is open for two days from Wednesday for the subscription. It will reopen on August 3, Rahul Singh, a senior fund manager — fixed income & a vice-president at LIC Mutual Fund, said.

Prabhu said the fund launch comes at an appropriate time as spreads between corporate bonds and the repo rate are retracing towards their mean of 1.07 per cent, making money market funds a favourable option to invest. The fund proposes to invest in money market securities having up to one-year maturity, along with an option to invest in both sovereign and money market instruments to arrive at an optimum asset allocation between the asset classes, Singh said. Earlier this month, LIC AMC chief executive TS Ramakrishnan had told PTI that the fund house is on an aggressive growth path expecting to gain from IDBI MF’s merger and new fund launches, which should help grow its AUM by over 70 per cent to Rs 30,000 crore by March.

The company had closed FY22 with around Rs 17,500 crore in assets under management. The new money market fund is the first from the company in many years and is among the first to launch a new scheme after the three-month Sebi ban on new launches ended on July 1. The company will soon be launching new schemes this fiscal, including a Rs 500 crore multi-cap equity fund. Currently, LIC MF’s asset under management is around Rs 17,500 crore.

(PTI)

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LIC’s Embedded Value Grows To Rs 5.41 Lakh Crore In Mar ’22

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The measure to measure the value of any insurance company is the embedded value

The country’s largest insurance company LIC has informed that as of March 31, 2022, the embedded value of LIC has been Rs 5.41 lakh crore. Whereas last year till March 31, 2021, its embedded value was Rs 95,605 crore. At the same time, as of 30 September 2021, its embedded value was Rs 5.39,686 crore. According to the information given by the company, the embedded value had increased due to the diversification of the fund after the changes in the LIC Act.

Actually, the measure to measure the value of any insurance company is the embedded value. It also includes the interest of the shareholders in the income from the allocated assets, apart from the funds reserved for the risks associated with the insurance business. This is a way to know the share value of the shareholders in the life insurance business.

The market capitalisation of LIC is Rs 4.50 lakh crore while the market value as per IPO price was Rs 6 lakh crore. LIC’s stock is still trading below its IPO price. Actually, the shares of LIC have been below their issue price since the listing. By the end of Thursday’s trading, LIC’s stock was down 0.91 percent at Rs 712.30, while the listing price of LIC IPO is Rs 949. Accordingly, LIC’s stock is still 25 per cent below its IPO price.

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Government Files Updated Draft Papers For LIC IPO

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The new draft papers incorporate December Quarter financials

The government has filed updated draft papers with market regulator SEBI for an initial public offer (IPO) of Life Insurance Corporation (LIC), incorporating December quarter financials of the insurance behemoth, an official said on Monday.

In the run-up to the mega IPO, on February 13, the government had filed the draft red herring prospectus (DRHP) with the regulator giving details of financial results till September. The DRHP got Sebi approval early this month.

“Updated DRHP of LIC with December financials has been filed,” an official said, adding it was required to be done as per Sebi observations.

The Life Insurance Corporation reported a net profit of ₹ 235 crore in the October-December quarter as per the updated financials. The net profit in April-December, 2021 increased to ₹ 1,671.57 crore from ₹ 7.08 crore a year ago.

The government is expecting to garner over ₹ 60,000 crore by selling about 31.6 crores or 5 per cent stake in the life insurance firm to meet the curtailed disinvestment target of ₹ 78,000 crore in the current fiscal.

The IPO was initially planned to be launched in March, but the Russia-Ukraine crisis has derailed the plans as stock markets are highly volatile.

The government has time till May 12 to launch the IPO without filing new papers with India’s Securities and Exchange Board.

LIC’s embedded value, which measures the consolidated shareholders’ value in an insurance company, was pegged at about ₹ 5.4 lakh crore as of September 30, 2021, by the international actuarial firm Milliman Advisors.

Although the DRHP does not disclose the market valuation of LIC, as per industry standards, it would be about three times the embedded value.

At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market. Once listed, its market value would be comparable to top companies like RIL and TCS.

So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at ₹ 18,300 crore, followed by Coal India (2010) at nearly ₹ 15,500 crore and Reliance Power (2008) at ₹ 11,700 crore.

So far, ₹ 12,423.67 crore has been garnered during the current financial year through offer for sale, employee OFS, strategic disinvestment, and buyback. The target for the entire fiscal is ₹ 78,000 crore.

The disinvestment target has been set at ₹ 65,000 crore for the next fiscal year.

(PTI)

IPO

Kerala Assembly Passes Unanimous Resolution Against LIC IPO

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He criticised the Centre for amending the LIC Act by including it in the Finance Bill

The Kerala Legislative Assembly on Wednesday passed a unanimous resolution, voicing concern over the Centre’s move to sell stakes in insurance behemoth LIC and urging it to retain the institution, which played a key role in the development of the nation.

Chief Minister Pinarayi Vijayan, who moved the resolution in the Assembly, opined that leaving the insurance giant to the interests of private players would not be beneficial to the country and hence the union government should revisit its decision. 

“The union government is trying to justify its actions by propagating that only 5 per cent stakes will be sold through an Initial Public Offering (IPO) and that is not privatisation. But it is clear that selling shares is the first step towards privatisation and that is the real objective of the government,” he said. 

He recalled that the LIC was nationalised with an aim to protect stakeholders from the exploitation of private companies and to ensure that insurance coverage was extended to the weaker sections and backward areas of the country. Such an institution is being privatised now without giving any opportunity for a detailed discussion or examination in the Parliament, he said.

He criticised the Centre for amending the LIC Act by including it in the Finance Bill. Quoting figures, the Chief Minister also said the public sector insurance giant has so far invested Rs 36.76 lakh crore for the benefit of the society and this mammoth source of resource would be over with privatisation.

The Centre, in February, had filed draft papers with capital market regulator Sebi for selling 5 per cent stake in insurance behemoth LIC through an initial public offering. The IPO is 100 per cent offer for sale (OFS) by the Government of India and no fresh issue of shares by Life Insurance Corporation (LIC).

(PTI)

IPO

LIC IPO gets SEBI green light, say reports

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Although SEBI has given its green light to the IPO, the government may delay the process owing to the current geopolitical situation where foreign investors have reduced their appetite for Indian equities

Life Insurance Corporation of India (LIC) has received SEBI’s approval to float its mega public issue, CNBC-TV18 and ET NOW reported citing sources. State-owned LIC had filed the Draft Red Herring Prospectus (DRHP) for its IPO with the capital markets regulator earlier in February to sell a 5% stake in the firm. Although SEBI has given its green light to the IPO, the government may delay the process owing to the current geopolitical situation where foreign investors have reduced their appetite for Indian equities. Earlier, Finance Minister Nirmala Sitharaman in an interview to Businessline had said she “wouldn’t mind” relooking at the LIC IPO timeline if “global considerations warrant that”. Financial Express had also reported, citing sources that government may reconsider LIC IPO date amid choppy market environment.

(inputs from Bloomberg)

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