LIC invests in Adani Group

What is the Controversy? LIC Explains What and Why?

The Life Insurance Corporation of India (LIC) has publicly clarified that the investment in the Adani Group was made independently and was based solely on sound financial evaluation and internal policy approvals.
The insurer has strongly denied any outside or government influence on these decisions.

LIC further clarified that the level of exposure is small compared to the insurer’s total holdings. This clarification is intended to promote investor confidence and transparency.

No outside body claims to be driving these decisions. Although previous controversies had sparked investigations, the official response aims to reinforce that all actions were in line with standard investment practice and that the “Government did not influence such investments in the Adani Group“.

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LIC invests in Adani Group | Controversy explained

• LIC emphasises that all investment options are guided by Board approved policies and are thoroughly due diligence.

• Any suggestion by the Department of Financial Services or any other government body to direct LIC’s investments is strictly rejected by LIC.

• The insurer’s exposure to the Adani Group is small compared to its total assets under management (AUM).

What LIC says and why It matters

LIC said investment decisions are made “independently after detailed due diligence in accordance with board-approved policies.” The company emphasises compliance with relevant laws, regulations and stakeholder interests.

The clarification comes after a major international media report claimed that there was a plan to divert around US$3.9 billion from LIC to Adani Group entities through government influence. LIC condemned this and said that no such roadmap or document was ever made.

 

LIC’s Investment scope & exposure

Here is how the numbers and context currently appear:

• LIC has assets under management (AUM) of Rs 10 lakh crore and is considered India’s largest institutional investor.

• The share of Adani Group companies in LIC’s total portfolio is said to be “less than 2 per cent” of the group’s total exposure.

• In fact, according to regulatory disclosures the LIC’s investment in Adani is about 0.975 per cent of AUM by book value.

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LIC invests in Adani Group | Let’s compare and understand

(i). For context: The portion allocated to the Adani Group is small once viewed as a large portion of LIC’s total assets under management. This helps mitigate potential concerns about concentration risk.

(ii). Another way to understand it: While media reports may emphasise the dollar amount or rupee figure involved even such percentage relative to total holdings is modest. This comparison brings clarity.

Why is LIC giving clarification on such investments?

• Transparency: LIC emphasises that its decision making and investments follow strict internal control and due diligence procedures.

• Risk Management: LIC aims to protect overall portfolio health and policyholder interests by keeping exposure to a limited level

• Perception & Reputation: The insurer’s clarification intends to maintain confidence in its governance and independence in investments.

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