LIC may sell land, premium commercial buildings to raise up to $7 billion: Report

LIC, India’s third-largest landlord, has tasked an internal team to work out a sale plan for its real estate assets across the country, two people aware of the matter told Mint, adding the process may start with Mumbai.

Some of LIC’s premium assets include the Jeevan Bharti building in Delhi’s Connaught Place; LIC building in Chittaranjan Avenue in Kolkata; and buildings housing the Asiatic Society and Akbarally’s in Mumbai, the article read.

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At the time of their last valuation, LIC’s real estate assets were pegged at a conservative ₹50,000-60,000 crore, the two people told Mint.

“For the formal asset sale process, a fresh valuation work for the LIC-owned buildings may be carried out,” one person told Mint. Many LIC buildings have never seen any sale transaction and their market value is not known, the person said, adding the actual value may be “at least five times more than the conservative one,” which works out to be around ₹2.5-3 lakh crore.

LIC may consider forming a separate entity to hold the real estate assets and manage their monetization, the first person told Mint, pointing to the challenge in valuing these assets.

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He said LIC also owns the famous State Bank of India building at Mall Road in Mussourie, Uttarakhand; and two separate buildings forming headquarters of prominent media houses in New Delhi and Lucknow.

“There are many such so-called marquee properties the insurer owns. But the valuation has to be done appropriately. The price discovery can happen only through an auction process piece-by-piece. But for that, certain amendments to the LIC Act and changes in laws will be required,” the second person said.

There have been plans to sell LIC’s real estate assets in the past, but they never took off primarily due to legal disputes. The plan has gathered pace now due to the government’s renewed push to monetize real estate properties under PSUs, the article read.

“To implement the monetization plan, the government has to speed up the legal resolution process. Many LIC properties are in litigation. Ideally, there should be a separate court to deal with the disputes related to assets of PSUs such as LIC,” said the second person. He said most of the properties owned by LIC get revalued every 2-3 years. But litigation either interferes with the process of valuation or the fair value of the asset itself.

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The plans come at a time when LIC is struggling to protect its market share. LIC’s total premium income grew barely 0.22% in the financial year 2024. The state-owned insurer’s first-year premium dropped 4.04% during the same period, while private insurers saw a 12.11% rise in new business, according to the report.

The vast expanse of LIC’s properties was originally aimed at increasing the insurer’s visibility, the article read.

“Insurance is a business of managing risks. For LIC, the presence of properties across the country helps in its branding and as an insurance company, the presence of the insurance company’s offices basically acts as a reassurance to the trust that the general public have put in us as policyholders,” said the second person.

However, the scale of real estate ownership has become large and therefore, according to the second person, it makes sense for LIC to monetize the vast bank of assets as a non-core business.

LIC will pay its shareholders a dividend of ₹6 for the financial year 2023-24. If the property sale plans go through, it may lift LIC’s profit and potentially lead to better dividends, according to the article.