{"id":6977,"date":"2024-11-27T05:22:20","date_gmt":"2024-11-27T05:22:20","guid":{"rendered":"https:\/\/blog.certifiedfinancialguardian.com\/?p=6977"},"modified":"2024-11-27T06:19:12","modified_gmt":"2024-11-27T06:19:12","slug":"bribery-charges-are-your-mutual-funds-holding-adani-stocks","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2024\/11\/27\/bribery-charges-are-your-mutual-funds-holding-adani-stocks\/","title":{"rendered":"Bribery Charges: Are Your Mutual Funds Holding Adani Stocks?"},"content":{"rendered":"\n

One of India’s largest conglomerates, the Adani Group<\/strong>, is once again under scrutiny. Billionaire Gautam Adani, his nephew Sagar Adani, and a few others linked to Adani Green Energy have been accused by the US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) of orchestrating a US $265 million bribery<\/strong> scheme.<\/p>\n\n\n\n

According to the charges, Adani and his associates paid bribes to Indian officials to secure lucrative renewable energy contracts. They also accused Adani of misleading US investors by concealing its corrupt practices while raising US $2 billion in loans and bonds. The alleged bribes were paid between 2020 and 2024 to obtain contracts expected to generate billions in profit.<\/p>\n\n\n\n

Following the indictment, Kenyan President William Ruto announced his decision to cancel a multibillion-dollar deal that would have seen Adani Group take control of the Jomo Kenyatta International Airport. The deal would have given Adani a 30-year lease for managing, upgrading, and modernising the airport.<\/p>\n\n\n\n

Meanwhile, France’s Total Energies announced that it will not make any fresh financial contribution as part of its investments in companies of the Adani Group till it gets clarity on accusations. The Andhra Pradesh state government too is mulling steps to cancel a power supply contract linked to the Adani group. Moreover, rating agency Fitch has placed some Adani bonds on negative watch amid the bribery charges<\/p>\n\n\n\n

This is not the first time that the Adani Group has found itself in the eye of a storm. If you recall, in January 2023, US-based short-seller ‘Hindenburg Research’<\/strong>, alleged the Adani Group companies of stock manipulation and accounting fraud<\/a>. The firm had also accused Adani Group companies of improper extensive use of entities set up in offshore tax havens and expressed concern about high debt levels.<\/p>\n\n\n\n

It is noteworthy that SEBI’s ongoing investigation into the allegations against the Adani Group did not identify any regulatory failures regarding the stock price manipulation till now, the regulator is yet to submit its final report.<\/p>\n\n\n\n

The Adani Group has strongly denied allegations calling them baseless while adding that they are fully compliant with all laws. Nonetheless, the serious allegations sent shock waves, resulting in a massive drop in the market caps of the listed companies of the Adani Group.<\/p>\n\n\n\n

Are your mutual funds holding Adani Group stocks?<\/strong><\/p>\n\n\n\n

Several active mutual funds continue to hold significant exposure in the Adani Group companies despite allegations of malpractices and wrongdoings since January 2023. Mutual Funds hold Rs 43,381 crore worth of shares in Adani Group companies such as Adani Ports and SEZ, Adani Power, Enterprises, Adani Energy Solutions, ACC Cements, Ambuja Cements, among others. Of these, actively managed mutual funds had exposure of about Rs 32,300 crore, while the balance was held by passively managed funds such as Index Funds and ETFs.<\/p>\n\n\n\n

In terms of market value, SBI Focused Equity Fund<\/a> held the highest exposure of Rs 1,059 crore, or 3% of its assets in Adani Ports and SEZ. At the AMC level, Quant Mutual Fund<\/a> continued to hold higher exposure in Adani Group Companies in its actively managed schemes, having investment in shares worth Rs 4,896 crore.<\/p>\n\n\n\n

Around 32 active mutual fund schemes hold exposure of 3% or more in stocks in Adani Group companies. Quant ELSS Tax Saver Fund<\/a>, Quant Flexi Cap Fund<\/a>, Quant Absolute Fund<\/a>, Quant Large Cap Fund<\/a>, and Quant Infrastructure Fund<\/a> were among schemes that held high exposure to Adani stocks as a percentage of their respective assets. For instance, Quant ELSS Tax Saver Fund<\/a> had allocated 7.6% of its assets in Adani Power.<\/p>\n\n\n\n

Mutual Funds with high exposure to Adani stocks<\/em><\/strong><\/p>\n\n\n\n

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\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Scheme Name\n<\/td>\nCompany Name\n<\/td>\nHolding (%)\n<\/td>\nMarket Value (Rs. in Cr)\n<\/td>\n<\/tr>\n
Quant ELSS Tax Saver Fund<\/a>\n<\/td>\nAdani Power Ltd.\n<\/td>\n7.60\n<\/td>\n834.74\n<\/td>\n<\/tr>\n
PGIM India Arbitrage Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n6.97\n<\/td>\n6.48\n<\/td>\n<\/tr>\n
HDFC Housing Opp Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n6.79\n<\/td>\n98.69\n<\/td>\n<\/tr>\n
ICICI Pru Commodities Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n6.61\n<\/td>\n161.16\n<\/td>\n<\/tr>\n
PGIM India Equity Savings Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n6.42\n<\/td>\n5.75\n<\/td>\n<\/tr>\n
Quant Flexi Cap Fund<\/a>\n<\/td>\nAdani Power Ltd.\n<\/td>\n5.92\n<\/td>\n445.06\n<\/td>\n<\/tr>\n
Quant Absolute Fund<\/a>\n<\/td>\nAdani Power Ltd.\n<\/td>\n5.54\n<\/td>\n124.64\n<\/td>\n<\/tr>\n
Mahindra Manulife Equity Savings Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n5.48\n<\/td>\n31.35\n<\/td>\n<\/tr>\n
HDFC MNC Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n5.39\n<\/td>\n34.14\n<\/td>\n<\/tr>\n
Quant Quantamental Fund<\/a>\n<\/td>\nAdani Power Ltd.\n<\/td>\n5.27\n<\/td>\n128.02\n<\/td>\n<\/tr>\n
Tata Quant Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n5.12\n<\/td>\n3.47\n<\/td>\n<\/tr>\n
Quant Infrastructure Fund<\/a>\n<\/td>\nAdani Power Ltd.\n<\/td>\n5.02\n<\/td>\n180.77\n<\/td>\n<\/tr>\n
UTI Transportation & Logistics Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n5.02\n<\/td>\n174.45\n<\/td>\n<\/tr>\n
Tata Quant Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n4.91\n<\/td>\n3.33\n<\/td>\n<\/tr>\n
Quant Large Cap Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n4.78\n<\/td>\n119.40\n<\/td>\n<\/tr>\n
DSP Equity Savings Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n4.56\n<\/td>\n98.59\n<\/td>\n<\/tr>\n
Quant Infrastructure Fund<\/a>\n<\/td>\nACC Ltd.\n<\/td>\n4.56\n<\/td>\n164.03\n<\/td>\n<\/tr>\n
PGIM India Arbitrage Fund<\/a>\n<\/td>\nACC Ltd.\n<\/td>\n4.49\n<\/td>\n4.18\n<\/td>\n<\/tr>\n
Quant Focused Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n4.44\n<\/td>\n49.75\n<\/td>\n<\/tr>\n
NJ Arbitrage Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n4.07\n<\/td>\n14.32\n<\/td>\n<\/tr>\n
Tata Equity Savings Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n4.02\n<\/td>\n8.68\n<\/td>\n<\/tr>\n
Quant Flexi Cap Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n3.97\n<\/td>\n298.51\n<\/td>\n<\/tr>\n
Quant Large & Mid Cap Fund<\/a>\n<\/td>\nAdani Power Ltd.\n<\/td>\n3.91\n<\/td>\n144.92\n<\/td>\n<\/tr>\n
Tata Housing Opportunities Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n3.87\n<\/td>\n23.61\n<\/td>\n<\/tr>\n
Tata Equity Savings Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n3.82\n<\/td>\n8.26\n<\/td>\n<\/tr>\n
Sundaram Arbitrage Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n3.77\n<\/td>\n8.36\n<\/td>\n<\/tr>\n
Tata Quant Fund<\/a>\n<\/td>\nACC Ltd.\n<\/td>\n3.61\n<\/td>\n2.45\n<\/td>\n<\/tr>\n
Bank of India Arbitrage Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n3.59\n<\/td>\n1.46\n<\/td>\n<\/tr>\n
Aditya Birla SL Equity Savings Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n3.53\n<\/td>\n22.85\n<\/td>\n<\/tr>\n
Edelweiss Equity Savings Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n3.47\n<\/td>\n18.71\n<\/td>\n<\/tr>\n
Sundaram Arbitrage Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n3.39\n<\/td>\n7.52\n<\/td>\n<\/tr>\n
Bandhan Infrastructure Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n3.37\n<\/td>\n59.85\n<\/td>\n<\/tr>\n
Quant Active Fund<\/a>\n<\/td>\nAdani Power Ltd.\n<\/td>\n3.37\n<\/td>\n354.55\n<\/td>\n<\/tr>\n
Tata Resources & Energy Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n3.34\n<\/td>\n34.83\n<\/td>\n<\/tr>\n
Bank of India Arbitrage Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n3.25\n<\/td>\n1.33\n<\/td>\n<\/tr>\n
Quant Absolute Fund<\/a>\n<\/td>\nAdani Enterprises Ltd.\n<\/td>\n3.18\n<\/td>\n71.64\n<\/td>\n<\/tr>\n
Quant Quantamental Fund<\/a>\n<\/td>\nACC Ltd.\n<\/td>\n3.16\n<\/td>\n76.83\n<\/td>\n<\/tr>\n
Quant Momentum Fund<\/a>\n<\/td>\nACC Ltd.\n<\/td>\n3.14\n<\/td>\n66.45\n<\/td>\n<\/tr>\n
ICICI Pru Transportation and Logistics Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n3.13\n<\/td>\n93.07\n<\/td>\n<\/tr>\n
PGIM India Equity Savings Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n3.07\n<\/td>\n2.75\n<\/td>\n<\/tr>\n
SBI Focused Equity Fund<\/a>\n<\/td>\nAdani Ports and SEZ Ltd.\n<\/td>\n3.03\n<\/td>\n1059.48\n<\/td>\n<\/tr>\n
ICICI Pru Quant Fund<\/a>\n<\/td>\nAmbuja Cements Ltd.\n<\/td>\n3.01\n<\/td>\n2.88\n<\/td>\n<\/tr>\n<\/tbody><\/table><\/div>\n<\/center>\n\n\n\n

Data as of October 31, 2024
The securities quoted are for illustration purpose only and are not recommendatory
(Source: ACE MF, data collated by PersonalFN)<\/p>\n\n\n\n

What should investors do?<\/strong><\/p>\n\n\n\n

Mutual fund schemes holding high exposure to Adani stocks is a cause for concern. These funds could witness significant volatility in their NAVs in the near term, exposing investors to higher risk.<\/p>\n\n\n\n

That said, over a period the risk can be mitigated as actively managed mutual funds hold a diversified portfolio of stocks – a fall in price of one stock is offset by a potential rise in another stock. Furthermore, no diversified equity mutual fund can hold an allocation of more than 10% in a particular stock to avoid concentration risk. Besides, diversifying the portfolio across various market caps, investment styles and strategies helps in minimising the risk.<\/p>\n\n\n\n

One should ideally only consider selling your mutual fund units only in the following scenarios:<\/p>\n\n\n\n