LIC likely to pick up 21% in IL&FS

Corporation to buy stake from UTI-I

The Life Insurance Corporation of India (LIC) is likely to pick up a 21 per cent stake in Infrastructure Leasing and Financial Services (IL&FS). The corporation will buy the stake from UTI-I, which is one of the promoters of IL&FS.

LIC officials said they have taken an in-principle decision, but are awaiting the valuation report. Chartered accountant firms "" Bharat S Raut and M P Chitale "" are understood to be undertaking the valuation exercise on behalf of LIC.

"We also need to get approval from the Insurance Regulatory and Development Authority (IRDA) as this would exceed the 15 per cent exposure cap set by the regulator," said a senior LIC executive. UTI-I is selling its holdings in various companies, and will utilise part of the proceeds of the sale to meet its liabilities.

UTI-I is selling promoter stake in a number of institutions, including the National Stock Exchange and the National Securities Depository Ltd.

The decision to pick up a stake in IL&FS is part of the corporation's commitment towards infrastructure financing, said the official. Regarding its other investments in infrastructure, LIC has committed to invest in bonds to be floated by the government for paying back foreign lenders to the Dabhol project.

IL&FS was incorporated in 1987 as a joint venture with the Central Bank of India, the erstwhile Unit Trust of India and Housing Development Finance Corporation as promoters.

Aside from stakes held by Indian financial institutions and banks, IL&FS' shares are also owned by ORIX Corporation of Japan (21 per cent), the International Finance Corporation, an arm of the World Bank (9 per cent) and Credit Commercial de France (5 per cent).

Among major projects undertaken by IL&FS include Noida-Delhi toll bridge, road projects in the state of Gujarat "" Vadodara-Halol Road Project and Ahmedabad-Mehsana Road Project as well as other road projects in Tamil Nadu.