State-owned insurance behemoth Life Insurance Corporation of India (LIC) said its total exposure in Adani Group companies is less than 1% of its total assets under management (AUM) at book value, said a report on Monday. The clarification came as Adani Group firms have been battered owing to a scathing report on the conglomerate by US short-seller Hindenburg Research.
“LIC’s total holding under equity and debt is Rs 35,917.31 crore as on December 31, 2022 under Adani group of companies. The total purchase value of equity, purchased over the last many years, under all the Adani group companies is Rs 30,127 crore and the market value for the same as at close of market hours on January 27, 2023 was Rs 56,142 crore. The total amount invested under Adani Group amounts to Rs 36,474.78 crore as on date. These investments have however been made over a period. Further it may be appreciated that the credit rating of all of the Adani debt securities held by LIC are AA and above which is in compliance with the IRDAI investment regulations as applicable to all the life insurance companies,” said LIC as per the Economic Times report.
Most Adani Group shares extended their sharp falls on Monday as the conglomerate’s rebuttal of the US short-seller’s criticism failed to pacify investors, driving stock market losses for the companies to $66 billion over three days.
Flagship Adani Enterprises, which is facing a crucial test this week with a follow-on share offering, rose 4%, but was off initial gains of as much as 10% and significantly below the offer price.
Adani Group has locked horns with Hindenburg Research and on Sunday hit back at the short-seller’s report of last week that flagged concerns about its debt levels and the use of tax havens. Adani said it complies with all local laws and had made the necessary regulatory disclosures.
Adani Transmission and Adani Total Gas plunged 20% each on Monday, while Adani Green Energy was down 18%. Adani Power and Adani Wilmar were down 5% each, while Adani Ports and Special Economic Zone slipped 0.5%.
The total assets under management by LIC are over Rs 41.66 lakh crore as of September 30, 2022. Therefore, LIC’s exposure in the Adani group, as on date, is 0.975% of LIC’s total AUM at book value, the insurer said.
“In the ordinary course of business, LIC does not share details of its company and industrial group specific investments. However, given that certain information is being circulated in the various articles in media about LIC’s exposure to Adani Group of companies, we are releasing this information to share the factual position regarding our exposure in Adani Group of companies in the equity and debt segments,” the insurer clarified.
LIC said it invests from a long term perspective and based on detailed due diligence.
“LIC follows a robust procedure for valuation of its liabilities and determination of solvency margin in order to ensure its financial soundness on continued basis. The available solvency margin of LIC as at September 2022 was well above the target solvency level of 160%. LIC Board and its management is committed to and conscious of its responsibilities towards all the stakeholders and will continue to follow appropriate principles and practices to safeguard their interests at all the times,” said LIC.