Following the governments advisory to sell its stake in Hindustan Unilever (HUL),Life Insurance Corporation tendered a large part of its holding in HUL to Unilever Inc in its open offer targeting share purchase amounting to over $4.5 billion (over Rs 27,000 crore).
According to the shareholding information disclosed by HUL on Tuesday,while LICs holding in the company stood at 3.22 per cent as of March 2013,at the end of the September 2013 LICs holding in the company fell below 1 per cent and its name dropped from the list of HUL shareholders holding more than 1 per cent in the company.
This clearly reflects that LIC tendered a large part or its holding in HUL and followed the governments directive to attract foreign currency in the economy,which in turn would provide support to the depreciating rupee.
Between May and June 2013,the rupee fell sharply by 11.8 per cent to hit 60 against the dollar. The government then started looking at ways to arrest the rupees fall.
The aggregate shareholding of insurance firms after the open offer came down from 6.42 per cent in March 2013 to 2.74 per cent in September.
The Indian Express had reported on July 5,after the closure of the open offer,that the government had nudged LIC to tender its holding in HUL.
While LIC and PSUs take their investment decisions independently,sources in the investment banking space said that the government used moral suasion and advised them to tender their holdings in HUL.