Even as shares of Adani Group companies kept falling over past two trading sessions, the Life Insurance Corporation of India (LIC), which has huge stakes in Adani Group, does not seem perturbed.
Since Hindenburg Research’s allegations of fraud against Adani Group went public on Wednesday, companies associated with the conglomerate experienced immense selling pressure in the markets. This has led to the group losing over Rs 4 lakh crore in market capitalisation in just two trading sessions.
LIC, the country’s largest institutional investor, has significant exposure to almost all of Adani Group’s listed companies. In Adani Enterprises, the flagship firm of Adani Group, LIC’s stake constitutes 4.23 per cent of the company’s total paid up capital. In Adani Ports, LIC owns a 9.14 per cent stake while its stake in Adani Transmission is 3.65 per cent. The state-backed insurer also has a 5.96 per cent stake in Adani Total Gas and another 1.28 per cent stake in Adani Green.
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Notably, LIC was allocated more shares in Adani Enterprises on Wednesday as the company filled its anchor book as part of its ongoing follow-on public offering (FPO). LIC is one among the 33 institutional investors who came in as anchors for the share sale. Through this process, the insurer is infusing another Rs 300 crore into Adani Enterprises, which will further increase its existing stake of 4.23 per cent.
LIC’s Loss
LIC’s overall stake in Adani Group took a beating on the bourses this week as Hindenburg’s allegations triggered a fall in the conglomerate’s companies. Many of the group’s shares ended on its respective lower circuits when trading ended on Friday, falling anywhere between 5 and 20 per cent.
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On Tuesday, before the release of Hindenburg’s report on Adani Group, LIC’s overall holdings in the conglomerate amounted to Rs 72,193 crore. This dropped 22 per cent and reached Rs 55,565 crore on Friday, after two days of the Hindenburg-induced selling spree. In a matter of just two trading days, LIC’s Adani holdings lost value of over Rs 16,500 crore.
It is now a matter of concern whether LIC’s large exposure to Adani stocks, and the fact that state-owned banks have lent significantly higher sums to Adani Group as opposed to private banks, will cause Adani’s stock market debacle to spill over to the broader Indian financial system. This was expressed by opposition leader Jairam Ramesh when he called for a thorough investigation into the accusations laid down by Hindenburg against Adani Group.
