LIC IPO: LIC’s investment in unlisted entities valued at Rs 2,866 crore as of September-end
Life Insurance Corporation of India (LIC) holds a certain proportion of its investments in unlisted entities — which are not readily tradable in the market. It also holds investements in infrastructure investment trusts (InvITs), the insurer said in its the draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (Sebi).
LIC disclosed that as of September 30, 2021, the value of its investments in unlisted entities was Rs 2,866.14 crore or 0.8% of its total investments on a standalone basis. It further said that till September 2021, it had faced no circumstances to sell these illiquid assets at significantly lower prices. “While, to our knowledge, we have not had any circumstances in the past three years and the six months ended September 30, 2021, where we were unable to sell these or potentially illiquid assets, or were required to sell these or the potentially illiquid assets at significantly lower prices,” LIC said.
According to the prospectus, for the six months ended September 2021, LIC’s investment in InvITs had a carrying value of Rs 63.04 crore or 0.00% of the investments (policyholders’ and shareholders’ together) on a standalone basis. InvITs allow individual/ institutional investors to invest directly in infrastructure, however, gains on these investments are comparatively lower than other asset classes.
Among equities, the insurer’s investments were valued at Rs 9.78 lakh crore for the six months ended September 2021, representing 24.78% of its total investments. More than 90% of the policyholders’ equity investments in India are in stocks that are a part of the Nifty 200 and BSE 200. The investment in listed equity represented approximately 4% of the total market capitalisation of NSE as of September-end, a report by Crisil said.
For the six months ended September 2021, LIC registered gains of Rs 23,242.53 crore via the sale of its investments, which is around 58% of Rs 39,809.6 crore gained in FY21. LIC continues to command a lion’s share of investment into equities by insurance companies, with a 77% market share as of December 2021, data from Primeinfobase.com showed.
Overall, LIC has invested 37.50% in central government securities, 24.78% in equity securities, 24.61% in state government securities, and 8.07% in corporate bonds, the DRHP said.