By 22 June, 2009

Life Insurance Corporation of India (LIC) along with its subsidiary, LIC Housing Finance, in which it holds a 40.84% stake, will launch a real estate focused domestic private equity fund. The fund is expected to have an initial corpus of Rs 500 crore to be launched by the end of September, according to a Reuters report.

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While LIC and LIC Housing Finance plan to retain the management control, they are also looking at roping in a third partner. The mortgager is already in talks with various parties for the same.

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The fund, which will be christened as LIC HFL Trustee Company, will initially look at investing in the real estate projects in India. It will invest in mid to large-sized housing and commercial projects in the country. It will also fund home finance firms that require funds.

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LIC will divert a part of its Rs 9,00,000 crore investment portfolio to the real estate fund. The country’s largest life insurer is also mulling an international private equity fund for which it will tie funds from Asian investors. However, LIC is yet to finalise the outline plan for the fund.

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LIC Housing Finance, which has a portfolio of Rs 28,000 crore, is reportedly looking at raising Rs 15,000 crore of debt in the current fiscal. It may consider options such as commercial paper (CP), non-convertible debentures (NCDs) and external commercial borrowings (ECBs) for raising the debt. The home finance company is also considering raising additional funds through a qualified institutional placement (QIP).

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At 11.41 a.m., shares in LIC Housing Finance were up 0.47 percent at Rs 583.10 in the Mumbai market.

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