LIC Housing Finance, the mortgage arm of Life Insurance Corporation of India (LIC), is set to foray into the venture capital arena and intends to start a Rs 500 crore real estate fund by the end of this financial year.
LIC Housing Finance is reportedly scouting for a banking partner for raising capital and will soon approach the Securities and Exchange Board of India (Sebi) to set up an asset management company. To invest in listed companies, companies usually register
with Sebi. “This is an opportune time to enter, considering the demand. We will form a separate asset management company to manage this fund,” a senior LIC Housing Finance executive told Business Standard.
Based on the response to the real estate fund, the company will decide on whether it will expand its presence in the venture capital space.
“We are yet to finalise the deal structure, but will definitely be the majority shareholder in the fund. We want to launch the fund in this financial year. But we have to shortlist a banking partner,” the executive added.
Sources said there are at least three major banks in the fray for a tie-up and a memorandum of understanding will be signed soon. While LIC Housing Finance would be the promoter of the real estate venture fund, LIC could also be one of the internal contributors of the fund.
In a recent interview to Business Standard, LIC Managing Director Thomas Mathew said the insurer has no plans to directly enter the private equity or venture capital businesses.
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The fund proposed by LIC Housing Finance will be used to finance real estate development and 50-60 projects are likely to be funded over 12-18 months.
A large number banks and finance companies have recently entered the venture capital space and the existing players are expanding their footprints.