LIC says ready to pick SUUTI's stake in Axis Bank, L&T and ITC if asked

MDT/PTI 12 October 2012

SUUTI, created in 2002 after the then UTI was wound up, owns stakes in ITC, Axis Bank and L&T, which the government is planning to en-cash as its effort to meet the fiscal deficit target

Mumbai: State-run Life Insurance Corp of India (LIC) on Friday said it has not been approached by the government to pick up stakes in Axis Bank, L&T and ITC, currently held by the Special Undertaking of Unit Trust of India (SUUTI), but added if it is so asked, it will definitely look at it, reports PTI.

"As far as LIC is concerned, we have not been approached (to buy the government's stakes in Axis Bank, L&T and ITC). In case they approach us, we will definitely have a look at it," DK Mehrotra, chairman of LIC told reporters on the sidelines of a capital markets summit organised by industry body FICCI.

SUUTI, created in 2002 after the then UTI was wound up, owns strategic stakes in three listed blue-chip entities: ITC (11.54%), Axis Bank (23.6%) and L&T (8.3%).

Besides, SUUTI also owns significant stakes in unlisted companies such as the Stock Holding Corporation of India (SHCIL), in which it owns 16.96% that is valued at about Rs300 crore.

The government is planning to en-cash these holdings which are worth over Rs40,000 crore, as part of its efforts at meeting the fiscal deficit target by divestment.

The plan is to sell the SUUTI stakes to an special purpose vehicle (SPV). The SPV holding will not pledge shares but will borrow funds by way of negative liens, under which it cannot sell the shares without the permission of lenders and the government.

When asked about the 10% equity exposure cap, Mehrotra said: "The corporation has been approaching the regulators and the finance ministry on this issue for quite some time. I think, both of them have taken it very positively. Hopefully, something should come and we will get some headroom".

LIC, which had bailed the government last March when the follow-on option of ONGC was bombed by picking up almost the entire stake worth over Rs12,000 crore, plans to invest Rs2.4 lakh crore this fiscal.

"We propose to invest Rs2.4 lakh crore this fiscal and have invested Rs65-70,000 crore so far," Mehrotra said, adding of the total investment, 10-15% constitute pure equity investments out of which it has invested Rs7,000-Rs8,000 crore as of now.

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