Page 14 - Insurance Times October 2020

As far as stress in its debt portfolio is "Other financial sector institutions of our corporate debt," Kumar. Also,
concerned, Kumar said, "We find that such as banks and insurance companies LIC's 8.25 per cent stake sale in UTI
corporates, where we have invested, have also been listed on the bourses in AMC through an IPO should fetch it
are fulfilling their debt servicing obliga- the past, and LIC's listing should also some tidy gains this fiscal.
tions both in repayment of principal be seen along those lines," said the
and interest. Very few companies have person, adding that only a small hold- LIC Housing Finance
availed moratorium facility which is ing in the insurer will be divested as of
not even 2 per cent of corporate now, which could be less than 10 per launches 'Project RED'
debt." cent and that the exercise should not LIC Housing Finance Ltd has launched
beseenasprivatisation of the life in- "Project RED" (Reimagining Excellence
Govt 'may divest just 5% surer. through Digital transformation) to im-
stake' in LIC LIC pockets Rs. 14,800 prove efficiencies at every level of the
organisation.
The government may sell just 5per crore in stock market prof- Project RED aims to create value
cent stake in Life Insurance Corpora- across the entire spectrum of stake-
tion of India, which could help it raise its in H1 FY21
upwards of Rs. 50,000 crore. LIC has booked profits of Rs. 14,857 holders that includes employees,
shareholders, business associates, ex-
Sources close to the development said crore for April-September 2020, isting and potential customers of
the government is hoping to go ahead against Rs. 11,437 crore for the same LICHFL, as per the housing finance
with the proposed disinvestment in the period last year, showing a growth of company's statement.
country's No 1 insurer, and wants to 30.37 per cent.
list it by February 21. LIC's investment in the capital market To be implemented over the next 21
months, the company said the initia-
However, instead of a 10 per cent dis- and G-Secs this year has also grown tive is expected to bring transforma-
investment, it may consider a small compared to last year. In the first half tional changes by organically linking
stake sale, given the expectation of its of FY21, LIC's total investments in G- LICHFL's work culture, strengthening
high valuation. A formal plan is yet to Secs, SDL (State Development Loans), processes across all verticals, deepen
befinalised andis still under discussion. corporate bonds and equity added up customer engagement and adopting
"This will depend on the valuation ar- to Rs. 2,63,845.98 crore, up 7.7 per the best-in-class technology to build
rived at and the market conditions and cent against Rs. 2,44,931.33 crore in
investor appetite at the time. the same period of FY20. capacity.
"A straight listing process in the domes- "In government securities and equities LICHFL has engaged Boston Consulting
tic bourses maybeaneasier exercise at we have found good investment oppor- Group as its consultant for this project
present," noted a person familiar with tunities. In corporate bond invest- and will be setting up a high-level
the development. Project Implementation Group which
ments, we are a bit cautious," LIC will approve and monitor capacity
"Inter-ministerial discussions are on, Chairman MR Kumar told. He added building plans of every constituent in
andit is expectedto beakey priority, that LIC plans to invest atleast a fur- the company, it added.
going ahead," said the source, adding ther Rs. 2-lakh crore in the remaining
that the Finance Ministry will move part of this fiscal. Siddhartha Mohanty, MD & CEO,
amendments to the LIC Act in the Win- LICHFL said, "We are investing in this
ter Session of Parliament. On its debt portfolio, LIC is not expect- project with long term objectives that
ing any major defaults, as it believes would generate more stakeholder
A Cabinet note has already been pre- that with the economic activity gain- value, expand geographies thereby
pared for selling up to 25 per cent ing momentum in the last two months, contributing to the economic growth
stake in the insurer, although this corporate financials should improve of the country.
maybedoneinstages. Sources said it is further.
hoped that the disinvestment in LIC will "The ultimate objective is to organize
not meet with too much opposition, as "LIC follows strict due diligences and and automate every facet of customer
the insurer will continue to retain its very few companies have taken a interaction to deliver elevated cus-
current character and functioning. moratorium - it's not even 2 per cent tomer experience".
The Insurance Times, October 2020