Irda asks LIC to get board nod for SUUTI stake buy

MUMBAI: Insurance regulator has put a spoke in the Life Insurance Corp’s bid to buy out SUUTI’s stake in engineering firm Larsen & Toubro and cigarette maker ITC where it is already the single largest stakeholder possibly to ensure that its board takes responsibility for the risk it would be taking, said two people familiar with the development.

The regulator kept aside the approval from the insurer’s investment committee which wants to buy the stakes valued at Rs 45,000 crore and instead ordered LIC to get an approval from its board of directors, said people who did not want to be identified.“They have sought permission to buy SUUTI’s stake in ITC and L&T,” said an Irda official. “We have asked LIC to get approval from its board to raise stake in the companies and not just approval from investment committee.”

The insurer with faces shrinking options on good investment which could provide stable growth and returns, is keen on buying the stake of SUUTI, an organisation that the government carved out of the Unit Trust of India to save the mutual fund as part of a bailout in 2003.

Now SUUTI owns some assets which belong to the government and it wants to raise Rs 56,500 crore through disinvestment of such holdings. The government started the process of selling SUUTI’s stake in various companies. It has stakes in 43 companies including BPCL, Grasim, Axis Bank, and NSDL. SUUTI holds 11.11% in ITC and 8.14% in L&T. 8.14% in L&T.