LIC Chairman MR Kumar. file | Photo credit: The Hindu
The LIC management will soon meet the top management of the beleaguered Adani Group and seek clarification on the crisis being faced by the diversified conglomerate, Chairman MR Kumar said here on Thursday.
LIC’s investment in shares of Adani group firms has been criticized by opposition parties as well as investors after the US-based short-seller. Hindenburg Research sparks a flurry of allegations against the Gautam Adani-led group, saying that its companies manage and manipulate share prices, run offshore shell companies for round-tripping and lackluster corporate governance practices.
“Though our investor team has already sought clarification from Adani, our top management is yet to contact them as we are busy preparing the results. We will soon call them to meet us and explain. We want to understand that’s what’s up.” in the market and in the group,” the chairman told reporters on Thursday’s earnings conference call.
“We will soon call them to know how they are managing the whole crisis,” Mr Kumar said.
Mr Kumar, however, refused to give a timeline of the meeting between LIC and Adani Group officials.
LIC, which is the country’s largest institutional investor, is the second largest shareholder in most of the Adani Group’s listed companies with a cumulative investment of ₹36,474.78 crore as of 27 January, which is 4.23% of the total public holding in percentage terms. those companies. But for LIC’s ₹44.76 lakh crore of assets under investment management, it accounts for only 0.97%.
As of 27 January, the value of this investment was over ₹56,000 crore, LIC said on 30 January, but since then these shares have declined further – cumulatively by about $100 billion or about 60% of their 24 January market value Percent.
When asked, the Chairman categorically said, “Our investments are still in the green and we have not made any provision for equity, which is the vast majority, or for debt. Our equity holding in the group is less than that of the total public.” 4.23%.” But out of our total market investment of 44.76 lakh crores, it is only 0.97%.” “We have some exceptions wherein we hold more than 30% in some companies”.
“Why are we making provisions when they are in the green. For some of the group companies (ACC and Ambuja Cements), our investments are more than two decades old.
On January 30, LIC issued a public statement saying: “As on date, our total holding under equity and debt in Adani group companies is Rs 36,474.78 crore. It stood at Rs 35,917.31 crore as on December 31, 2022. The total purchase price of group companies bought over the years is Rs 30,127 crore and its market value at close of market time on January 27, 2023 is Rs 56,142 crore. LIC has exposure to all 10 listed Adani group companies. , It did not disclose its exposure on an individual company basis.
Even after the Hindenburg Report, LIC as an anchor investor invested around ₹300 crore in Adani Enterprises’ ₹20,000 crore follow-on public offer to buy 9,15,748 shares.
The book value of its ₹44.75 lakh crore market assets under management is only ₹6.87 lakh crore, and its exposure to Adani group companies at the same book value is only 4.23%, Mr Kumar said.
Since the publication of the Hindenburg Report on January 24, three days before the launch of the ₹20,000-crore follow-on public offer (FPO) of group flagship Adani Enterprises, the group companies’ shares have lost over $100 billion in value. or about 60% from their Jan. 24 value.
The FPO was fully subscribed but was closed by the management after a day.