LIC chairman on Adani Group: 'Haven't reduced exposure, but...'

The Life Insurance Corporation (LIC) has not reduced any exposure in Adani Group but it wants the embattled conglomerate to "throw some light on what is happening in the market", the state-owned insurer's chairman said on Thursday.

LIC was recently under fire for investing in Adani Group companies, whose shares have seen massive erosion in market cap following a spate of allegations made in a report by US-based short seller Hindenburg Research.

LIC has invested over Rs 36,000 crore in Adani Group companies. A week after the Hindenburg report and subsequent market rout, LIC in a statement said the total purchase value of equity, purchased over the last many years, under all the Adani Group companies was over Rs 36,000 crore and the market value as on January 27 was Rs 56,142 crore.
 
On Thursday, LIC chairman M R Kumar said that he will take a view on the company's investment in Adani Group two to three years from now. He also said that the state-run insurer would be calling the management of Adani Group to understand what was happening in the market, "if they (Adani) can throw some light on it".

"We will be calling them sometime just to know the business profile and what they are planning to do and how are they planning to manage the whole thing," the LIC chairperson said.  
 
Following the report by Hindenburg, the shares of Adani firms came under heavy selling pressure, wiping off thousands of crore in a matter of few days.

Speaking on the selling of Adani shares by foreign funds, the LIC chief said the largest insurer takes a long-term view on its investment and that it doesn't enter and exit quickly. "Even if the foreign funds are exiting is there a way to do business, we don’t do business like this, we buy and hold for a long time. We will take a view one year, two years or three years from now," he said.

Recently, Valuation guru Aswath Damodaran said LIC's investment in Adani was one of its best bets in the last 20 years. He said the insurer made a lot worse investments than investing in the Adani Group. If one looks at the cost of shares at which LIC invested in Adani Group and the prevailing value of those shares, they were one of better investments that LIC made in the last 20 years, Damodran said while speaking to India Today. 

LIC held over a 1 per cent stake in companies like Adani Enterprises, Adani Green Energy, Adani Ports, Adani Total Gas, Adani Transmission, Ambuja Cements and ACC, according to data available with Ace Equity.

On Thursday, the insurance major reported multi-fold surge in net profit at Rs 6,334 crore for the quarter ended December 31, 2022 as against Rs 235 crore in the year-ago period. The company's net premium income increased 15 per cent to Rs 1.1 lakh crore in Q3FY23 as compared to Rs 97,620 crore in Q3FY22.

 

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