LIC Housing Fin holds 34% stake in LIC MF post stake sale

LIC Housing Finance has sold 19.3% in LIC MF to Nomura for Rs 138 crore. Speaking on the issue, Ramachandran Nair, Director and CEO, LIC Housing Finance said the company still had a 33.9% stake in LIC Mutual Fund. "Initially, Nomura will have some investment directly into the company, thereby, diluting the stake. It could be around 10% of the existing paid-up capital," he said. "After the dilution, we will be left with around 36% of our total stake and we will be holding 20% post dilution and the remaining will be sold off to Nomura. So they will have a total stake of 35% in LIC Mutual Fund."

Also read: Nomura picks up stake in LIC Mutual Fund

Here is a verbatim transcript of the exclusive interview with R Ramachandran Nair on CNBC-TV18. Also watch the accompanying.

Q: You just sold nearly 20% in LIC Mutual Fund to Nomura and raised quite a bit of money, will you hold on to the remaining stake or will you also monetize that?
A: We will be holding back our 20% stake in LIC Mutual Fund.

Q: What is the total capital raising plan after the QIP programme that you have unveiled? How much you will go on to raise and through what kind of instruments?
A: Our board has decided to offer Rs 1 crore equity shares through qualified institutional placement QIP subject to approval of the AGM and for the time being this will be sufficient to take care of our capital adequacy ratio (CAR). Right now, we are having 13.5 and this will help us to go along with the growth in the business.

Q: With respect to LIC Housing Finance, after the stake sale in the mutual fund how much gets added to the book value for you?

A: We at the moment have 33.9% stake in LIC Mutual Fund. Initially, Nomura will have some investment directly into the company, thereby diluting the stake. It could be around 10% of the existing paid-up capital. So after the dilution we will be left with around 36% of our total stake and we will be holding 20% post dilution and the remaining will be sold off to Nomura. So they will have a total stake of 35% in LIC Mutual Fund.

Q: What is the target that LIC Housing Finance has set out both in terms of loan growth in FY10 and where you can hold Non Performing Asset (NPAs) at?
A: The industry is looking up. Last year we had 25% growth, this year at this point in time, it is very good and more than 100% growth in sanctions we are experiencing and for the year as a whole we are looking at 30–40% growth in disbursement and portfolio growth could be around 25%.