LIC prepares Rs10,000-cr war chest for SUUTI stake

Life Insurance Corporation (LIC) has set aside a corpus of nearly Rs10,000 crore to buy a part of the shares owned of the Special Undertaking of Unit Trust of India (SUUTI).

The government has informally sounded out LIC about the impending dilution of its SUUTI shareholding and the country's largest investor is likely to snap up the opportunity, according to a Business Standard report citing unnamed sources.

 ''We will be interested, as these are very good investment options. Funds won't be a problem as we will be investing more than Rs15,000 crore in equities in the last quarter,'' said a senior LIC official, according to the report.

For the insurer, it makes sense to buy the huge chunk of blue-chips at minimum impact cost. If it tries to accumulate such quantities of shares in the open market, the share prices would spike, making the acquisitions expensive.

According to insurance sector rules, an insurance company can invest in up to a 10-per cent stake in a company.

However, LIC has been granted a special exemption in certain cases. ''We have to take permission from the regulator to increase our holdings to more than 10 per cent.
But that won't be a problem as earlier too the regulator allowed it under special circumstances,'' the official said.