The Collateral: Crash hits Govt-owned LIC hard, its Adani share value dips 22%

Meanwhile, the share price of LIC, too, came under pressure on Friday and fell 3.5 per cent during the day – 5.3 per cent over the last two days.

While shares of Adani Total Gas where the Government-owned LIC owns 5.96 per cent fell 20 per cent on Friday; the shares of Adani Enterprises (LIC holding 4.23%) fell 18.5 per cent during the day and Adani Transmission (LIC holding 3.65%) fell 19.99 per cent.

Adani Ports (LIC holding 9.1 per cent) fell 5 per cent and Adani Green Energy (LIC holding 1.28 per cent) too fell 20 per cent during the day.

Other group companies, too, witnessed sharp decline on Friday.

While the Adani Group lost Rs 3.37 lakh crore in market capitalisation on Friday, over the last two trading sessions, it has lost Rs 4.17 lakh crore in market capitalisation. Gautam Adani, who occupied the third spot in the Forbes list of billionaires, slipped to 7th spot Friday.

As LIC has emerged as one of the biggest losers besides the promoters of Adani Group — on account of fall in Adani Group share prices — it is important to note that Life Insurance Corporation of India, over the last nine quarters increased its shareholding sharply in four of the seven listed Adani Group companies, and in at least one of them almost six-fold.

(Ambuja Cements and ACC have been excluded as they were acquired by Adani Group in 2022).

On December 1, 2022, The Indian Express had reported how LIC had steadily increased its holdings across Adani group companies. Between September 2020 and December 2022, LIC increased its holding significantly :

• From less than 1 per cent in flagship Adani Enterprises, LIC’s stake rose to 4.23 per cent.
• nIn Adani Total Gas, it jumped to 5.96 per cent from less than 1 per cent.
• In Adani Transmission, LIC shareholding rose to 3.65 per cent from 2.42 per cent
• In Adani Green Energy, it has increased to 1.28 per cent from less than 1 per cent.
• The only exceptions are Adani Ports, where LIC holding has marginally declined from 9.61 per cent till September 2022 to 9.14 per cent in December 2022; and two other companies Adani Power and Adani Wilmar, in which it is under 1 per cent.

In fact, following the significant jump in its shareholding of Adani group stocks, the value of LIC’s holding in the Adani Group companies multiplied 10 times since September 2020: From just Rs 7,304 crore, or 1.24 per cent of the insurer’s equity AUM (assets under management), to Rs 72,193 crore as on Tuesday. On Friday, it fell to Rs 55,565 crore.

Significantly, in the insurance sector, LIC is the overwhelming No. 1 when it comes to investing in Adani Group companies and the value of its holding accounts for over 98 per cent of the entire insurance industry’s investment in the group.