LIC has joined hands with Sidbi for contributing to the corpus of MSME-focused venture capital funds along with the India Aspiration Fund being managed by Sidbi
State-run Life Insurance Corporation of India (LIC) invested close to Rs 2.7 lakh crore in equity and debt markets during the financial year 2015-16. The insurance major made a profit of Rs 11,000 crore through its equity investments in the previous financial year, company officials said on Thursday.
Of the total corpus of Rs 2.7 lakh crore, Rs 65,000 crore was invested into the equity markets and the remaining in the debt segment, senior officials in the insurance company said.
LIC officials were speaking on the sidelines of an event where Small Industries Development Bank of India (Sidbi) signed a memorandum of understanding with LIC for supplementing the government’s efforts under fund-of-fund operations for the venture fund industry.
“Profit booking in the equity markets was Rs 11,000 crore in the last financial year. Though we stay away from announcing investments targets, in the past few years growth was around 10-15% which we can achieve even in this financial year,” said one of the officials.
The MoU was executed for the purpose of establishing a fund with Sidbi by LIC for contributing to the corpus of MSME-focused venture capital funds along with the India Aspiration Fund (IAF) being managed by Sidbi.
LIC has been one of the domestic investors in alternative investment funds. In order to scale up operations and bring in more long-term institutional players, LIC has decided to establish a fund with SIDBI for contributing to the corpus of MSME-focused venture capital funds along with IAF.
LIC will be contributing up to 10% of the fund size of IAF to be managed by SIDBI. The government has set up a fund with an initial corpus of R2,500 crore and a total corpus of R10,000 crore over a period of four years. An amount of R500 crore was already released for the fund-of-fund meant for start-ups.
Speaking at the event, Jayant Sinha, minister of state for finance, said the government is working with the Insurance Regulatory and Development Authority of India (Irdai) and the Pension Fund Regulatory and Development Authority (PFRDA) to make it possible for insurance and pension funds to also be able to invest in AIF-I and AIF-II funds.
“After LIC, we are also hopeful that many other important pools of capital — whether it is high net worth individuals, other insurance companies, endowments trusts or charities – will consider invest in venture capital industry as it is done around the world. That’s will lead to more robust and diversified set of funding sources for entrepreneurial ecosystem,” he said.