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LIC stake in Axis Bank at six-year high

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SummaryThe last time when banks raised capital in 2012, LIC was a big participant

The stake of Life Insurance Corporation of India (LIC) in Axis Bank has crossed the 10% mark after a gap of nearly three years with the insurance behemoth making open-market purchases at regular intervals. According to the latest disclosures, LIC holds a stake of 10.45% in Axis Bank ó the highest in nearly six years.

According to a stock exchange disclosure, LIC bought 52.08 lakh shares of Axis Bank between September 1, 2013, and January 21, 2014, for a total consideration of nearly Rs 626 crore. After the transactions, LIC's stake has risen from 9.34% to 10.45%.

LIC is one of the promoter entities of Axis Bank and also the second-largest stakeholder after Specified Undertaking of UTI (SUUTI) that has a stake of 20.72%, according to the shareholding pattern as on December 31, 2013. Incidentally, SUUTI has appointed three merchant bankers ó JPMorgan, Citigroup and JM Financial ó to sell a part of its holding in the bank.

Market players tracking LIC are not surprised as the insurance major has been historically bullish on the banking space. The last time when banks raised capital in 2012, LIC was a big participant. For instance, it bought 2.73 crore shares in Bank of India for Rs 1,084 crore; 1.95 crore shares in Punjab National Bank for Rs 1,640 crore and 1.52 crore shares in Dena Bank for Rs 160 crore.

LIC has been steadily increasing its stake in many banks with its holding already in excess of 10% in entities like Corporation Bank, Vijaya Bank, Bank of Baroda, Bank of India, Syndicate Bank, Allahabad Bank and UCO Bank. Apart from LIC, the other promoters of Axis Bank include General Insurance Corporation, New India Assurance and National Insurance Company.

Public entities that hold over 1% stake in the bank include Europacific Growth Fund, ICICI Prudential Life Insurance, Lazard Asset, American Funds Insurance, Centaura Investments (Mauritius) and Government Pension Fund Global.

Meanwhile, the Axis Bank scrip closed at Rs 1,186.85, down a marginal 0.19%. In the last three months, the shares have traded in a range between Rs 1,000 and Rs 1,300 on the Bombay Stock Exchange.

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