LIC to hike stake in South Indian Bank
24 Jun 2009
The insurance giant is also planning to raise its stake in the Kerala-based South Indian Bank (SIB) – one of the pioneer private sector banking institutions in South India with more than 530 branches across the country – in which it is presently holding 1.91 per cent, in order to enhance the business relations with the bank, LIC chairman T S Vijayan said in Kolkata yesterday
Current regulations permit a maximum stake of 10 per cent by an insurance company in a bank.
In March 2009, the insurance major had raised its stake in state-run Indian Overseas Bank to 9.96 per cent purchasing additional shares worth Rs57.65 crore in open-market transactions. (See: LIC raises IOB stake to 9.96 per cent).
LIC has started promoting its insurance products through SIB and has similar plans for the marketing of LIC credit card apart from collection of policy premiums. SIB has ended the tie-up it had with ICICI Prudential in favour of LIC.
SIB intends to expand its presence in North India by setting up several new branches in various cities with 42 of them planned in the Delhi region alone and targets Rs36,000 crore business in 2009-10, 16 per cent up from last year.
In another development, LIC has hiked its stake in Tata Coffee, producer and exporter of coffee, to 5.28 per cent from 4.84 per cent by investing Rs1.63 crore through open market transactions.
LIC plans to partly divest its stake in UTI Asset Management Co. Ltd. (UTIAMC), along with other three shareholders. State Bank of India, Bank of Baroda, Punjab National Bank and LIC holds 25 per cent each in UTIAMC and may sell up to 6.5 per cent each.
Vijayan said: ''UTIAMC has decided to rope in a strategic partner. The deal is yet to be frozen and has not come to a critical stage. But all the four partners will take the same decision. We will be acting in unison. We will offload stake in equal proportion.''
Regarding a possible stake sale in LIC Mutual Fund, Vijayan said that LIC had no plans of offloading any stake in its mutual fund arm although earlier reports indicated Japanese financial firm Nomura's interest in LIC MF. (See: LIC MF to sell 35 per cent stake to Nomura: reports)
