LIC largest holder of G-secs, equities, household savings, says Report

Source: Reuters

The IPO-bound national insurer LIC is not only the largest holder of government debt — owning 19 percent of the G-secs — but also the single largest owner of equities, the largest fund manager as well as holder of household savings, dwarfing even SBI deposits, as per a report.

Holding 17 percent of the over Rs 80.7 lakh crore dated government securities, maturing by 2061, the Reserve Bank is the second-largest holder of government debt, while led by public sector banks, commercial banks collectively own around 40 percent. Other insurers cumulatively own only 5 percent.

LIC's ownership of G-secs peaked in March 2019 when it held 20.6 per cent and 20.5 percent in March 2020, according to Swiss brokerage UBS Securities. With $520 billion of total assets under management (AUM), LIC is the largest institutional investor in the around $3 trillion domestic equities market.

With 29 percent share or $130 billion in AUM, LIC also has the largest share of domestic institutional equity AUM, which is a shade more than half of all equity mutual funds in the country, as per an analysis by the brokerage. LIC has about 4 percent stake in equities, making it the single-largest stakeholder after the government (promoter stake), but this is down from its 2017 peak when it held 4.7 percent of the market.

LIC also has a disproportionately higher share in state-owned stocks with around 9 percent share. As of December, it owns 10 percent of RIL, 5 percent each in TCS, Infosys, and ITC, and 4 percent each in ICICI Bank, L&T, and SBI.

After the listing, LIC would be the largest investment in the government's portfolio of listed equities — 43 percent of $377 billion in AUM. This is important from the point of view of government budget financing through divestment and it will also be the third-largest company in terms of market cap of $172 billion after Reliance Industries ($214 billion) and TCS ($182 billion).

With 28 crore policyholders, LIC has the maximum share of household savings. The report said nearly Rs 10 out of every Rs 100 saved by households each year goes to LIC, making it larger than even the perceived staple of household savings — SBI, which gets around 8 percent of the bank deposits.

It will also be the 32nd-largest based on free float market cap as the government is selling only 5 percent stake through the IPO. Again RIL leads the free-float market with $108.7 billion, followed by HDFC Bank at $88.2 billion, Infosys ($84.7 billion), ICICI Bank ($72.8 billion, HDFC ($58.2 billion), and TCS ($50.8 billion). But among the state-owned companies, LIC will be the third-largest in terms of free-float value at $8.6 billion, after SBI's $27 billion and PowerGrid's $9.4 billion.