LIC may sell properties, land to net over $7billion
LIC owns expensive properties in many major cities, including plots and commercial buildings, which it can sell
Life Insurance Corporation of India, is the country’s largest insurance company that sells life insurance policies. As per latest reports, Life Insurance Corporation of India (LIC) is planning to sell its prime properties. Let’s find out why LIC feels the need to sell its properties, what kind of properties will be sold and how much profit LIC can make by selling these properties.
LIC owns expensive properties in many major cities, including plots and commercial buildings, which it can sell. According to a report in Mint, the company plans to raise between 6 to 7 billion dollars, which is approximately 50 to 60 thousand crore rupees, by selling its properties. The task of preparing to sell real estate assets has been assigned to an internal team. The sale of properties could commence from Mumbai.
Besides being the largest insurance company, LIC is also the third largest landowner in the country. LIC possesses prime locations in many major cities with land and commercial buildings. These include the Life Insurance Building in Connaught Place, Delhi, the LIC Building on Chittaranjan Avenue in Kolkata, and the Asiatic Society and Akbarally buildings in Mumbai. The report mentions that in the last valuation, LIC’s real estate assets were estimated at 50 to 60 thousand crore rupees. The actual value of these properties could be much more than this.
A new assessment may be conducted for selling the properties.
But why the need to sell land now? In the financial year 2023-24, LIC reported a net profit of 40,676 crore rupees, up from 36,397 crore rupees in FY2022-23. LIC has announced a dividend of 6 rupees per share for FY2024 shareholders. If LIC’s plan to sell properties is approved, it could increase the company’s profit, resulting in better dividends for shareholders.
As per sources in the report, to manage real estate assets separately, LIC may establish several units, considering potential difficulties in asset valuation. Despite LIC’s plan to sell expensive buildings and lands, there are challenges. The report suggests that determining the correct value of assets may require auctioning. However, this necessitates amendments to LIC’s Act and changes in laws. Additionally, many of LIC’s properties are entangled in litigation, requiring expedited legal solutions for monetization plans.
Challenges in Selling Properties
While LIC’s plan to sell its expensive buildings and lands appears ambitious, it faces several obstacles. According to reports, determining the correct value of assets may require auctioning. However, this would necessitate amendments to LIC’s Act and changes in laws. Additionally, many of LIC’s properties are stuck in litigation, which requires the government to expedite legal solutions to implement monetization plans. Earlier plans to sell LIC properties were hindered by legal disputes and could not proceed. This plan to sell land comes at a time when LIC is facing difficulties in maintaining its market share in the insurance business. It is encountering tough competition from private insurance companies. LIC currently holds assets worth more than 51 lakh crore rupees.
Published: June 18, 2024, 16:47 IST