LIC Home Finance launches Rs 500-cr VC fund

MUMBAI: Life insurance major LIC's housing finance subsidiary LICHFL today launched a Rs 500-crore venture capital fund to finance realty and micro infrastructure projects.

LIC Housing Finance (LICHFL) and Life Insurance Corporation (LIC), sponsors of the fund, have pooled in Rs 50 crore each and another Rs 100 crore have been raised through external investors to launch the fund.

The fund christened 'LICHFL Urban Development Fund' will be managed by LICHFL's dedicated subsidiary LICHFL Asset Management Company and it targets to raise the remaining Rs 300 crore in the next nine months, LIC acting chairman DK Mehrotra said here.

A half of the amount will be invested in mid-income housing projects while the other half will be dedicated to income yielding micro-infrastructure projects like schools, hospitals, special economic zones, industrial IT parks, the company said.

Stating that LICHFL's pedigree in the sector will be a big asset, Mehrotra rubbished queries on the timing of the launch. With headwinds like repeated interest rate hikes, lower growth, job uncertainties and policy paralysis, the realty and housing sector has been facing stress at present.

LICHFL chief executive VK Sharma said the company has been investing in other similar realty-focused funds earlier too and the decision to enter the fray by themselves is prompted by the handsome returns which have been yielded in the past.

For investors, LICHFL AMC is assuring a return of 12 percent, Sharma said, adding it will be targeting institutional investors and high networth individuals to raise the balance amount.