LIC wants to reduce investment exposure amid Adani share rout

The caps, once authorised by the LIC board, would further limit the insurer’s risk. Today, the insurer is only permitted to invest up to 10% of a company’s outstanding debt and 10% of its outstanding stock. In an effort to reduce risk concentration in the wake of criticism of its investments in Adani group companies, the Life Insurance Corp. of India (LIC) is planning to impose caps on its debt and equity exposure to companies, according to two sources. State-run LIC was attacked for having over $4 billion exposure to companies from the Adani group after the group’s valuation dropped by over $100 billion following damning charges made by Hindenburg Research, a company based in the United States.

LIC, the country’s largest domestic institutional investor with assets under management of about $539 billion, is planning to cap its debt and equity exposure in individual firms, group companies and companies that are backed by same promoters, one of the sources, with knowledge of the matter, told Reuters.”LIC is looking to have ‘boundary conditions’ on its investments that would limit its exposure to scrips,” said the source.