LIC Mutual on the hunt for buyouts

LIC Mutual Fund is open to acquiring assets of other mutual funds. "We plan to increase the size of funds under management to Rs 7,000 crore this fiscal and aim to be among the top five-six funds in the country," said R N Bhardwaj, managing director, Life Insurance Corporation of India (LIC).

"We may need foreign participation in terms of technical expertise to increase in size. We are not ruling out acquisition of existing mutual funds to grow," said Bhardwaj.

LIC Mutual Fund has Rs 5,000 crore worth of assets under management (AUM) and aims at tapping the claims amount paid by LIC to its policyholders to grow in size.

"LIC pays out Rs 20,000 crore in claims annually. As the policyholder or the nominee needs to put the money somewhere, we hope part of these funds will be invested in fund. This is possible if efforts are made to increase fund inflows considering the synergy between the two businesses," Bhardwaj added.

The asset management company (AMC) will expand its footprint in the country and will appoint more agents and come out with new schemes to attract higher inflows.

"This will make us more competitive in the market," said Bhardwaj. The AMC has the second-largest investor base after Unit Trust of India, with 17-lakh investors, majority of whom are retail investors.

Since the insurance mammoth also has a 25 per cent holding in UTI II, the Securities and Exchange Board of India (Sebi) is understood to have asked LIC and State Bank of India to exit their existing mutual fund arms. Bank of Baroda and Punjab National Bank also have equal shareholding in UTI II.

LIC is willing to exit UTI-II if it means choosing between a 25 per cent holding in UTI-II and its own group asset management company.

"There is immense synergy between our insurance business and our asset management arm. Most LIC Mutual Fund investors are our policyholders," said Bhardwaj. LIC has a good brand name in the country and has been rated as the number one brand by rating agency Icra, he said.

LIC has also not closed its options to acquire GIC Mutual Fund once various issues are ironed out. The General Insurance Corporation of India is keen to exit from the AMC provided it finds a buyer which can protect customer interests.

Out shopping

• LIC Mutual Fund has Rs 5,000 cr worth of assets under management
• Aims to tap the claims amount paid by LIC to its policyholders
• Keeps options open to acquire GIC Mutual Fund