LIC to infuse Rs 25 crore into its subsidiary LIC MF Asset Management

State-owned Life Insurance Corporation of India (LIC) on Monday announced the infusion of share capital of Rs 25 crore into its subsidiary, LIC Mutual Fund Asset Management.

"The board of LIC, at their meeting held on Monday, has approved the infusion of share capital of Rs 25 crore in LIC Mutual Fund Asset Management on a preferential basis," the country’s largest life insurer informed exchanges.

At present, LIC holds a 49 per cent stake in the asset manager. LIC Housing Finance and GIC Housing Finance are the other stakeholders with 35.3 per cent and 15.7 per cent stakes in the company, respectively.

LIC MF ranks 23rd among fund houses in terms of assets under management (AUM). In the September 2023 quarter, the fund house's average AUM was Rs 24,257 crore.

In July 2023, LIC MF completed the acquisition of IDBI Mutual Fund. The acquisition was a result of a regulatory issue. The MF regulations do not allow a single promoter to own more than a 10 per cent stake in two asset management companies. IDBI Bank, the parent of IDBI MF, has been majority-owned by LIC for the last few years.

The fund house is targeting to grow its AUM multi-fold to get into the top-10 rankings, as per media reports. It also plans to raise the share of equity funds in its total AUM. At the end of October, active debt schemes accounted for 49 per cent of the total AUM of the fund house. A greater share of high-yielding equity assets can boost an asset manager's revenue and profitability. Equity schemes can levy a higher percentage of the total expense ratio (TER) vis-a-vis debt schemes. TER is the cost associated with managing and operating a fund that the AMC levies on the investors of a scheme.

Shares of LIC closed 0.36 per cent lower on Monday at Rs 770 on the National Stock Exchange.