Norway's $1.35-trn wealth fund says it has no exposure left in Adani Group companies

Norway's $1.35-trillion sovereign wealth fund said on Thursday it has in recent weeks divested virtually all its remaining shares in companies belonging to the embattled Adani Group. 

The fund, at the end of 2022, held stakes in Adani Total Gas, Adani Ports & Special Economic Zone and Adani Green Energy. "We have no exposure left to Adani companies. Since 2022-end we have further reduced our exposure to Adani companies," said Christopher Wright, the fund's head of ESG risk monitoring.

"We have monitored Adani for many years (on ESG) issues, many on their handling of environmental risks," he said.

Norway's sovereign wealth fund, at the end of 2022, held a stake in Adani Total worth $83.6 million, a stake in Adani Ports worth $63.4 million and a stake in Adani Green Energy of $52.7 million.

The fund, managed by a unit of the central bank, owns 1.3 per cent of all globally listed shares with stakes in some 9,200 companies.

On January 31, the CEO of Norway's $1.3-trillion oil fund said the world’s largest sovereign wealth fund has been reducing stakes in Adani Group companies owing to the "complex situation" arising out of potential risks attached to the ports-to-power conglomerate. 

“We have sold out of quite a few [of Adani companies] and we have reduced in some of the others. So we have very, very little exposure compared with what you would have expected us to have,” Nicolai Tangen told UK's Financial Times.

Adani Group stocks have been facing intense volatility ever since US short seller Hindenburg Research's January 24 alleged improper use of offshore tax havens and concerns about high debt, which Adani denied, but the subsequent market meltdown has led to a dramatic and sudden fall in group chairman Gautam Adani's fortunes.

The oil fund reduced its positions in Adani companies because of risks such as potential corruption, environmental damage and human rights abuses, Tangen had said.

“It’s a complex situation. We have a separate department that is looking at risk-based divestments . . . We started to look at this a long time ago, and so we have taken a lot of exposure out.”

The oil fund, which usually owns on average 1.3 per cent of a stock, had holdings at the end of 2022 of 0.3 per cent in Adani Ports and Special Economic Zone, 0.17 per cent in Adani Total Gas and 0.14 per cent in Adani Green Energy.

Financial index provider MSCI said on Thursday that some Adani securities should no longer be designated as free float, after market participants raised concerns about the eligibility of the Indian conglomerate's companies for some of its indexes.

MSCI, the US-based creator of widely-watched stock indexes, said in a statement that it "has received feedback from a range of market participants concerning the eligibility and free float determination of specific securities.

"MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float ... This determination has triggered a free float review of the Adani Group securities," it added.

Changes for Adani securities associated with its MSCI Global Investable Market Indexes are due to be announced later on Thursday as part of its regular review for February.

MSCI defines the free float of a security as the proportion of shares outstanding that is considered available for purchase in public equity markets by international investors.

In response to the MSCI statement, Hindenburg founder Nathan Anderson wrote on Twitter: "We view this as validation of our findings".

Some of Adani companies shares had been rebounding this week but tumbled again on Thursday after the MSCI announcement. Adani Enterprises sank 11.2 per cent, after losing as much as 20 per cent in early morning trade.

Adani Transmission, Adani Total Gas and Adani Power were each down 5 per cent, while Adani Ports and Special Economic Zone were down nearly 2.9 per cent.

With inputs from Reuters