LIC bets on Adani: For 2 years, it has steadily increased its stake in its group companies | News Bharat

WHEN mutual funds are pulling away from Adani Group companies, when their shares are holding firm, one investor is finding it attractive: state-run Life Insurance Corporation of India.

In just eight quarters since September 2020, LIC has sharply increased its stake in four of the seven Adani Group listed companies and in at least one of them almost sixfold.

Stock exchange filings of Adani Group companies reviewed by The Indian Express show that the total value of LIC’s holdings in these seven companies stood at Rs 74,142 crore as on date. This is 3.9 percent of Adani Group’s total market capitalization of Rs 18.98 lakh crore.

Of its equity portfolio of around Rs 9.3 lakh crore as of June 30, 2022, the value of LIC’s holdings in Adani Group companies at Thursday’s closing price stood at 7.8 percent.

How LIC’s shareholding in Adani Group companies increased between September 2020 and September 2022:

* From less than 1% in flagship Adani Enterprises LIC, the stake rose to 4.02%.

* At Adani Total Gas, it jumped to 5.77% from less than 1%.

* In Adani Transmission, LIC’s stake rose to 3.46 percent from 2.42 percent

* At Adani Green Energy, it has increased to 1.15 percent from less than 1 percent.

* The only exceptions are Adani Ports, where LIC holding is unchanged at 9.61 percent, and two other firms Adani Power and Adani Wilmar, where it is below 1 percent.

Reflecting this increase in shareholding and share prices, the value of LIC’s shareholding and its value of LIC’s shareholding in Adani Group companies has multiplied 10-fold since September 2020: from just Rs 7,304 crore, or 1.24 percent of the insurer’s equity AUM (assets under management), to Rs 74,142 crore, or 7.8 percent now.\

This stands out for the following reasons:

* In the insurance sector, LIC is overwhelmingly No. 1 when it comes to investing in Adani Group companies. As of December 1, 2022, its Rs 74,142 crore represents 98.9 percent of the entire insurance industry investment in the group.

* LIC’s investment is more than five times the value of the holdings of all equity mutual funds in Adani Group companies. As of October 31, 2022, only Rs 15,701 crore, or barely 1 per cent, of the total equity fund assets of Rs 15.22 lakh crore were invested in Adani Group companies – a level, in terms of equity, that maintained since September 2020

* Over the past two years, as LIC has bought stakes in Adani Group companies, the group’s market capitalization has also risen – nearly seven times to Rs 18.98 lakh crore now from Rs 2.78 lakh crore on September 30, 2020. The benchmark Sensex rose 1.66 times to close at 63,284 points on Thursday.

The Indian Express emailed the LIC spokesperson seeking a response on the insurer’s substantial purchases of Adani shares. No response was received.

Incidentally, LIC holds 3.98 percent of the combined market capitalization of Tata Group companies (Rs 21.91 lakh crore) and mutual funds as a whole hold 4.9 percent.

Similarly, while LIC holds 6.45 percent stake in RIL (market cap of Rs 18.42 lakh crore), mutual funds hold 5.68 percent.

Tata Group companies and Adani Group are the top two in terms of market capitalisation, followed by RIL.

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