Friday, July 3, 2009

Insurance firms not concerned in VC funding

It seems that insurance companies are not interested in venture capital (VC) funds despite Insurance Regulatory and Development Authority''s (Irda) allowed insurance companies one year back to invest in VC funds.

In August last year, Irda had permitted life insurers to invest 3 per cent of their total investible corpus in VC funds or 10 per cent of the fund''s size, whichever is lower. For general insurers, the limit is 5 per cent of investment assets or 10 per cent of the fund size whichever is lower.

Insurers said investments in venture capital funds were long term while their 90 per cent premium was collected under unit-linked plans (Ulips). "Venture capital is not exactly a matter class we are looking at. There are other avenues like project finance, corporate bonds and equity. We have invested less than 0.5 per cent of the investible corpus, Rs 1,65,000 crore. Irda''s guideline is not a constraint for us," said Life Insurance Corporation of India (LIC) Executive Director, Investments, N Mohan Raj.

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