LIC debt exposure to Adani Group below 1% of AUM

In the backdrop of the storm stirred by the Hindenburg Report publication, even LIC has been pulled into the controversy. It may be recollected that Hindenburg Research had levels charges of tax evasion and steep debt levels on Adani group. India’s largest insurer, LIC of India, has been one of the aggressive financiers of Adani group, through the debt and the equity route.

There are 2 important things that LIC has clarified on the Adani exposure issue. Firstly, LIC has stated quite unequivocally that their exposure to the Adani Group (debt plus equity) stood at Rs35,917 crore. That is around 0.98% of its overall AUM of around Rs39 trillion. In short, the point made by LIC is that the exposure was really too small to worry about over a normal market fall. 

There is another point that LIC has underlined about its Adani group exposure, especially with reference to market value/cost ratio. Out of the total exposure of LIC to the Adani Group to the tune of Rs35,917 crores, the equity exposure stands at Rs30,127 crores while debt exposure stands at Rs5,790 crore. 

What is interesting, according to LIC, is that even after the sharp fall in the Adani group stocks, the market value of its exposure to Adani group stands at Rs56,142 crores. That is an 86% appreciation over the cost of Rs30,127 crore. LIC has also clarified that the debt portfolio of the holdings in Adani are of AA rating and above, which is in compliance with IRDAI investment regulations. 

LIC has also had a detailed dialogue with the Adani Group management in light of the Hindenburg report. In a terse statement, LIC has only said that they would take a well deliberated call on the investment, putting the interests of policyholders and shareholders above all else. For now, it will be status quo.