IFCI sells 1% stake in LIC Housing

 The share of LICHFL has been very volatile over the past couple of months moving from Rs 138 in August end to well over Rs 180 last week. The scrip fell to Rs 120 mid-September and closed yesterday at Rs 167.90.

 The financial institution, which is in dire need of funds, is expected to sell off its balance 9.32 per cent stake in the housing finance company.

 IFCI's move comes amid plans by the housing finance major for a public offer. The housing finance company started with an initial capital of Rs 100 crore in 1989, and then went public in September 1994.

 Last year, it reported a 22 per cent rise in net profit to Rs 180.1 crore with reserves and surplus of Rs 786.1 crore. The housing finance company has a comfortable capital adequacy ratio (CAR) of over 17 per cent against National Housing Bank-stipulated norm of 12 per cent.

 The key promoter, Life Insurance Corporation of India (LIC), has, however, not shown any interest to pick up additional stake in the housing finance arm, in which it holds 38.5 per cent.

 The market had expected LIC to buy out IFCI's holding as the state insurer can hold up to 49 per cent without affecting the 'company' status of LICHFL.

 LICHFL officials confirmed that IFCI had sold 1-2 per cent of its holding but said LIC has not picked up the stake.

 IFCI's keenness to exit from LICHFL and book profit from its investment in the company follows its mounting non-performing assets (NPAs) and debt obligations to banks and financial institutions.

 LICHFL officials, however, pointed out that IFCI has not approached the management or promoters to sell its stake. Any promoter is expected to inform the management prior to exiting the company or selling part of its stake.