Tens of millions of dollars worth of Australian retirement savings have been exposed to the beleaguered Adani Group as the Indian conglomerate faces a stock rout after allegations of fraud.
Several major superannuation funds, including those that cater for government workers in Queensland and employees at the Commonwealth Bank (CBA), invested in the company after allocating money to emerging markets to boost returns.
Australia’s $243bn Future Fund, which was set up to strengthen the commonwealth’s long-term financial position, also has an exposure 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, said.
Analysis of superannuation holdings by the climate activist group shows that the investments 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.
Adani companies have been subject to relentless selling since a 24 January report by US investor Hindenburg Research accused the conglomerate of stock manipulation and accounting fraud.
Adani Group published a 413-page rebuttal of the allegations, likening the US short-seller’s report to an attack on India, but it has been unable to arrest a relentless slide in the value of the company.
Shares in seven listed Adani companies have shed about US$125bn (A$182bn) since the report, representing well over half the value of the ports-to-power conglomerate that runs Australia’s contentious Carmichael coalmine and rail project in Queensland.
“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 said.
The Australian Retirement Trust, a Brisbane-headquartered manager with more than $200bn in assets, was exposed to at least six Adani entities worth several million dollars before the report was released.
The investment was part of a “passive” allocation, whereby the fund appoints external fund managers to invest on its behalf in a particular country or sector, often tracking an index.
The fund, which offers products to Queensland government employees and their families as part of its service, did not respond to questions.
CBA’s super fund for its workers, Group Super, had a small exposure as did Brighter Super, which is the traditional fund for local government employees in Queensland.
“The fund has a very small exposure to Adani via two passive, indexed portfolios,” Brighter’s chief investment officer, Mark Rider, said, adding that the $2.5m investment represented 0.008% of the fund’s overall holdings.
Following a freedom-of-information request by former senator Rex Patrick, the Future Fund recently disclosed it had a $33.1m investment in two Adani companies before the share price collapse.
One of those companies, Adani Total Gas, has so far in 2023 lost 75% of its value.
The Future Fund’s chief executive, Raphael Arndt, told a Senate committee last week the investment was made through an external fund manager with a mandate to invest in emerging markets, such as India.
“Those managers run their own due diligence on the companies they invest in,” Arndt said.
The large size of the Adani conglomerate, which is the biggest airport and private seaport owner in India, meant its shares found their way into the portfolios of many fund managers around the world seeking to profit from the rise of the Indian economy.
Norway’s sovereign wealth fund had a sizeable holding, but sold most of its Adani stakes before the share collapse.
The $70bn Hesta fund, primarily catering for health and community service workers, had one of the larger exposures to Adani among Australian funds in recent years.