'Very little exposure': Norway’s $1.3-trn wealth fund has been reducing stakes in Adani Group firms, says CEO

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.

The FT report came on Tuesday at a time when Adani Group's flagship firm Adani Enterprises' Rs 20,000-crore FPO sailed through in a dramatic fashion on last day of the share sale after the group firms' stocks tanked owing to a short-seller's report.

Hindenburg Research's report last week 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 added.

“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.

At the end of 2019, the fund had a 0.75 per cent stake in Adani Ports, which it has since placed on its observation list because of its relationship with armed forces in Myanmar.

In August 2021, APSEZ had said its investment in a port in Myanmar was not in violation of any sanction guidelines issued by the Office of Foreign Assets Control (OFAC) of the US Department of Treasury.

The project had run into controversy after it was reported that APSEZ chief executive Karan Adani had in July 2019 met Senior General Min Aung Hlaing, the army chief who led a coup against the elected government.

The Adani Group had previously said it had won the Yangon International Terminal project last year through a global competitive bid. The project requires $290-million investment.

Hindenburg Research, which last week flagged concerns about the use of tax havens and "substantial debt" at the group said that shares in seven Adani listed companies have an 85% downside due to what it called "sky-high valuations".

The Oslo-based fund now holds about $200 million of the stocks, reported Bloomberg on Tuesday.

Norway's wealth fund, one of the world's largest investors, posted a record loss of 1.64 trillion crowns ($164.4 billion) for 2022, bringing to an end a three-year run of soaring profits as stocks and bonds were hit by the Ukraine war and inflation.

The previous largest loss was 633 billion crowns in 2008.

It ends a record-breaking streak for the fund, where annual returns exceeded one trillion crowns in each of the three years from 2019 to 2021, amounting to more than four trillion crowns combined.

"We are invested in 9,000 companies in 70 countries. There is just nowhere to hide," Tangen told a news conference.

The single biggest stock market loss came from the fund's stake in Amazon, which declined in value by 56 billion crowns, followed by a loss in shares of Facebook owner Meta Platforms of 52 billion and in Tesla with 47 billion.

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