LIC hikes stake in select blue chips beyond 10%

DOMESTIC insurance giant Life Insurance Corporation (LIC) has raised its stake beyond 10% in a few blue chip companies even after the insurance regulator IRDA decided to impose a cap of 10% on the institution's investment in a single company.      While IRDA last week said it would give reasonable time to LIC to adhere to the investment restrictions, that, however, seems to have encouraged the latter to make quick acquisitions in select stocks where it holds less than 10% equity.      The strategy, according to market sources, could be to take advantage of the beaten-down valuations to make some capital gains subsequently when market conditions improve, before bringing the stakes below the prescribed limit.      LIC has made fresh investments in companies like Siemens, PTC India, Tata Power and Cipla in which it now holds more than 10% stake each. Based on Wednesday's closing, the combined value of the institution's additional investments in these companies amounted to nearly Rs 800 crore.      A senior LIC official told ET that the Corporation treats its strategic investments and investments by unit-linked investment plans separately. Q2 buys hike stake over 10%      WHILE the strategic holdings are not traded, investments by some of the funds could rise or fall. "It's possible that in some companies, the total investment would have crossed 10% in the second quarter because of increased investment by some of the Ulip funds," said the official. The official said that IRDA norms came in August and some of the investments could have taken place before that.      According to disclosures filed with BSE, LIC bought 97,34,113 shares of Siemens between February 6 and September 5, 2008, resulting in a hike in its stake from 7.7% as on December 31, 2007 to the current 11.3%.      There are many other blue chip companies, including Tata Motors, Tata Steel, Corporation Bank, Ranbaxy, Cipla, M&M, Maruti Suzuki, Dr Reddy's, MTNL, HPCL, Oriental Bank and Reliance Infra where LIC holds more than 10% stake over a period of time.