The two companies are looking for a third partner, but will retain the management control of the fund.

This is the first time that the country's largest life insurer, LIC, also the largest investor in the stock market, will get into the private equity business. The new entity will be called LIC HFL Trustee Company.

A senior LIC official told Financial Chronicle that a lot of opportunity existed in real estate. "We will identify a number of mid-to large-sized housing and commercial projects. We will also fund home finance firms, which are in need of funds. LIC has an investment portfolio of
Rs 900,000 crore, a part of which will get diverted to the realty fund," he said.

So far, LIC has channeled a bulk of its invest-ible surplus into debt and equity. The portfolio will now be diversified in the hope of better returns by tapping the potential of the real estate sector.

LIC is also considering an international private equity fund. Asian invest-ors will be roped in for this. The fund will invest in Indian ventures. LIC is yet to decide on the contours of the international fund, the official said.

LIC owns 40.84 per cent in LIC Housing Finance, which has a portfolio of Rs 28,000 crore and 8 per cent of the home loan market in India.