Life Insurance Corporation of India (LIC), India’s largest institutional investor, is reportedly suffering about $6 billion notional loss in the value of its share holdings in various companies of the beleaguered Adani Group, facing a market rout in the last one month following allegations of ‘brazen stock manipulations’ and ‘massive accounting frauds’.
According to a Business Today report, LIC witnessed an enormous notional loss of ₹497.28 billion ($6.01 billion) amid the ongoing sell-off in Adani stocks.
The report said that “the cumulative market value of LIC’s investment in Adani Enterprises, Adani Green Energy, Adani Ports and Special Economic Zone, Adani Total Gas, Adani Transmission, Ambuja Cements and ACC declined to nearly ₹332.42 billion on February 23, 2023, from around ₹829.70 billion on December 30, 2022.”
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Its loss calculations are based on the latest shareholding data available for the quarter that ended on December 31, 2022.
CNBC reported that as per its calculations the value of LIC Holding in Adani Group companies turned negative on Thursday, after eroding ₹5 billion in stock valuation during the day.
The network said that until Wednesday, LIC was sitting on a profit of ₹0.94 billion on its Adani investments – but by noon on Thursday, that had been wiped out by the loss of ₹5 billion on its shares it suffered, making it a net loss for the public sector company.
The port-to-power Adani Group is currently mired in deep controversy and market rout after the US short-seller Hindenburg Research accused it of massive stock manipulation and accounting fraud in a report, made public on January 24.
Following the market crisis, LIC, in a statement on January 30, said its total holding under equity and debt was “₹359.17 billion as on 31.12.2022 under Adani Group of companies.”
LIC claimed last month that the market value for the investment at the closing of market hours on January 27, 2023 was ₹561.42 billion, in excess of its investments over time, making the investments profitable.
Even before the allegations made by Hindenburg Research, some quarters in India had raised questions over LIC’s decision to heavily invest in the ‘overleveraged’ Adani Group stocks.
Adani Group stocks have been hitting lower trading circuits on the Bombay Stock Exchange for several days consecutively after the Hindenburg report.
The Adani Group, however, has denied all allegations levelled by Hindenburg Research in a 413-page report.
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