LIC’s Q4 Investment Strategy: Raises Stake in Adani Group Companies Amidst Turmoil

Despite the sell-off crisis triggered by a negative report from US-based short seller Hindenburg Research, mutual funds have reduced their investments in Adani Group companies. However, Life Insurance Corp of India (LIC), which is the largest investor in public markets in the country, has increased its investments in four group stocks during the March quarter.

During the March quarter, Life Insurance Corp of India (LIC) increased its investments in four Adani Group companies, namely Adani Green Energy, Adani Total Gas, Adani Enterprises, and Adani Transmission. On the other hand, LIC reduced its stakes in Ambuja Cements and Adani Ports & Special Economic Zone. LIC’s shareholding in ACC remained unchanged, standing at 1,20,33,771 shares or 6.41 per cent at the end of the quarter.

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Based on stock exchange data, Life Insurance Corp of India (LIC) raised its investment in Adani Enterprises from 4.23% in the December quarter to 4.26% by the end of March. Moreover, as of March 31, 2023, LIC held 2,14,70,716 shares in Adani Green Energy, representing a 1.36% stake, which is 8 basis points higher than the 1.28% stake it had in the company on December 31, 2022.

In the March quarter, LIC raised its investment in Adani Total Gas by 6 basis points to reach 6.02% compared to the 5.96% it held in the previous quarter. Similarly, LIC’s stake in Adani Transmission increased slightly by 3 basis points from 3.65% to 3.68%. However, LIC slightly reduced its holdings in two Adani Group stocks, Ambuja Cements and Adani Ports and Special Economic Zone, by 0.03% and 0.02%, respectively, during the same period.

In March, Finance Minister Nirmala Sitharaman revealed to the Lok Sabha that Life Insurance Corp of India’s (LIC) debt exposure in Adani Group companies decreased slightly from ₹6,347 crore as of December 31, 2022, to ₹6,183 crore as of March 5.

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As per a written response to the Lok Sabha, as of March 5, Life Insurance Corp of India (LIC) had a debt exposure worth ₹5,388.60 crore in Adani Ports and SEZ. The insurer also had debt exposure in other Adani Group companies, including Adani Power (Mundra) with ₹266 crore, Adani Power Maharashtra Ltd – Phase I with ₹81.60 crore, Adani Power Maharashtra Ltd – Phase III with ₹254.87 crore, Raigarh Energy Generation Ltd with ₹45 crore, and Raipur Energen Ltd with ₹145.67 crore.

In January, US-based short seller Hindenburg Research leveled a series of accusations, including fraudulent transactions and share-price manipulation, against the Adani Group, resulting in a drop in the shares of the group’s companies. The group refuted the allegations as falsehoods, asserting that it adheres to all legal and disclosure obligations.