LIC INCREASES EQUITY STAKES IN COMPANIES DESPITE REGULATORS’ RULING

India’s largest insurer Life Insurance Corporation (LIC) has risked incurring the wrath of the country’s insurance watchdog Insurance Regulatory Development Authority (Irda) by upping its stake in a number of corporates beyond 10%, thus contravening Irda’s recent ruling that insurers must reduce their equity stakes in companies to below 10%. LIC had requested special dispensation from the regulator and an extended deadline to reduce its holdings to prevent it losing any value from its numerous investments. Irda recently stated that it would give “reasonable time” for LIC to adhere to its new investment rules, however LIC’s latest move may test its relationship with Irda. According to India’s Economic Times, LIC has made fresh investments worth 8 billion rupees in the Indian operations of Siemens, Tata Power, Cipla and PTC India and raised its stake in all of these companies beyond 10%. The Economic Times reports that “market sources” have viewed LIC’s latest investments as an effort to capitalise on the vastly reduced valuations of many listed companies due to the current global financial crisis. Siemens has seen the value of its shares fall by 30% in the last month, while shares in PTC India and Tata Power have fallen by 18% and 12% respectively.