Aussie Retirement Savings Investing in Adani Group Exposed to Share Rout

Several mega Australian retirement funds, including the $243 billion Future Fund, who had invested in the Adani Group to boost returns have been exposed to the conglomerate’s stock rout.

Several major superannuation funds, including those cater for government workers in Queensland and employees at the Commonwealth Bank (CBA) had invested in the Group after allocating money to emerging markets to boost returns, The Guardian reported.

Shares of several Adani Group companies were routed after US investor Hindenburg Research published a report on January 24 accusing the conglomerate of stock manipulation and accounting fraud. The Group published a 413-page rebuttal of the allegations alleging that the US short-seller’s report was “an attack on India”.

Shares of seven listed Adani companies have lost around $125 billion since the report’s publication representing more than half the value of the ports-to-power conglomerate, which also runs Australia’s contentious Carmichael coalmine and rail project in Queensland.

Future Fund, set up to strengthen Australia’s long-term financial position, was also exposed to two Adani companies that are now worth a fraction of the original investment.

“Any super fund investing in Adani Group companies has failed its members on climate action and due diligence,” Will van de Pol, a Market Forces asset management campaigner, told the newspaper.

The investment are collectively worth tens of millions of dollars but only represent a small fraction of an individual fund due to the diversified nature of their stock holdings, according to an analysis of superannuation holdings by the climate activist group.

“These funds have used members’ money to prop up Adani’s unacceptable coal expansion plans, including the disastrous Carmichael mine, and failed to see glaring investment risks that existed for years before being outlined in the Hindenburg report,” Van de Pol added.

For example, Brisbane-headquartered manager Australian Retirement Trust, with more than $200 billion in assets, was exposed to, at least, six Adani entities worth several million dollars before Hindenburg released its report.

The fund appointed external fund managers to invest on its behalf in a particular country or sector by often tracking an index. The fund, which offers products to Queensland government employees and their families, did not respond to questions asked by The Guardian.

CBA’s super fund Group Super and Brighter Super, which is the traditional fund for local government employees in Queensland, had small exposures.

“The fund has a very small exposure to Adani via two passive, indexed portfolios,” Brighter’s chief investment officer Mark Rider said. The $2.5 million investment represented 0.008% of the fund’s overall holdings, he added.

Following a freedom-of-information request by former senator Rex Patrick, Future Fund recently disclosed investing $33.1 million in two Adani companies before the collapse of the Group’s shares. One of the companies Adani Total Gas has lost 75% of its value so far this year.

Future Fund’s chief executive Raphael Arndt informed a Senate committee last week that the investment was made through an external fund manager with a mandate to invest in emerging markets, such as India. “Those managers run their due diligence on the companies they invest in,” Arndt said.

Even Norway’s sovereign wealth fund $70 billion Hesta, which primarily caters for health and community service workers, had a sizeable holding in the Adani companies but sold most of its stake before the market bloodbath.