LIC Debt And Equity Exposure May Start Investments Capping After Rout In Adani Group Stocks

LIC Share Market Exposure: The controversial Hindenburg Report on Adani Group greatly influenced the stock market. Due to this Adani group companies lost more than 100 billion dollars, but the effect was not limited to this. Hindenburg’s report has also affected the government insurance company LIC. According to the news, Life Insurance Corporation of India is now planning to fix the limit of LIC Debt & Equity Exposure in debt and equity of various companies.

Currently there is such a limit on exposure

A Reuters report quoted sources in LIC as saying that the state-owned insurance company is looking to impose cap conditions on its investments, which will limit its exposure to various stocks. Once this proposal is approved by the LIC Board, then it will be implemented. Right now there is a limit on LIC’s exposure, but that is something different. At present, LIC cannot invest more than 10 percent of the outstanding equity or debt of a company.

Investment in these companies of Adani

Life Insurance Corporation of India is the largest domestic institutional investor (DII) in the Indian market. The government insurance company does value creation for its shareholders (LIC Shareholders) and policyholders (LIC Policyholders) by investing money in the stock market. According to stock market data, LIC holds shares in seven Adani group companies. These companies include Adani Enterprises, Adani Green Energy, Adani Ports and Special Economic Zone, Adani Total Gas, Adani Transmission, Ambuja Cements and ACC are involved.

exposure is still minor

The value of LIC’s holding (LIC Adani Holding) in all Adani’s shares is Rs 30,127 crore. LIC has invested in different shares of Adani in installments at different times. LIC had said in a statement a few days ago that its total exposure to Adani’s companies, including both debt and equity segments, is Rs 36,474.78 crore. This figure is according to 31 January 2023. If we compare LIC’s exposure to Adani’s companies from total managed assets ie AUM, it is only 0.975 per cent. LIC’s AUM is around $539 billion.

This is how the value fell after the report

In his report dated 24 January 2023, Hindenburg had accused the Adani group of fraud in accounting and manipulation of share prices. On the other hand, the Adani group had termed all the allegations made in the Hindenburg report as baseless and motivated by a special agenda. Hindenburg had also said in his report that the shares of Adani Group are overvalued. Some shares of the Adani group fell by up to 80 per cent in about a month after the report came out.

Such criticisms of LIC

The Reuters report states that the effort to cap exposure is to improve investment strategies. By doing this, LIC will also be saved from the criticisms that the government company has had to face after the huge fall in Adani’s shares. Critics of LIC said that like Adani group, having high exposure in one place can affect the fund of policyholders of LIC.

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