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Monday , January 7 , 2013
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CalPERS dumps stocks for Iran ties

New Delhi, Jan. 6 (PTI): US-based CalPERS, one of the world's largest pension funds, has flagged off concerns over investments in the shares of various Indian oil companies, including Oil India and Petronet LNG, because of their Iran-related business interests.

The California Public Employees’ Retirement System (CalPERS), which manages investments of over $240 billion globally, has exited its holding in Petronet LNG and blocked future investments, alleging failure on the part of India’s largest liquefied natural gas importer to take “substantial action” to curtail business operations in Iran.

At the same time, CalPERS has blocked all its future investments in another state-run energy major — Oil India Ltd. The country’s largest public sector company, Oil and Natural Gas Corp Ltd (ONGC), is also being monitored by the pension fund for possible Iran ties, the pension fund said in its annual legislative report for the year ended December 31, 2012, while detailing its various Iran-related investment decisions.

At present, CalPERS has no investments in the shares of either Oil India or ONGC.

However, the pension fund has decided to continue with its $4.6 million investment in shares of another Indian energy company BPCL, after the oil marketing major communicated to the pension fund that none of its business activities were subject to the sanctions imposed against Iran.

Iran faces significant economic sanctions from the US, as also from many other countries, mostly because of its alleged nuclear weapon programme. Last week, Iran pitched for deeper bilateral ties and increased co-operation in security and economic area with India, saying that the two countries face “common threats and interests”.

CalPERS, a public pension fund providing retirement and health benefit programmes to over 1.6 million Americans, is required by a law, called the Iran Act, to annually report holdings in companies doing business in the defence, nuclear, petroleum, and natural gas industries in Iran and to exit investments in any company that fails to take substantial action to cease or limit operations in Iran.

It is the largest pension fund in the US and the fifth largest globally after the pension funds of Japan, Norway, Netherlands and Korea in terms of asset size.

CalPERS has traditionally held significant equity holdings in large and mid-sized Indian companies operating in sectors including banks, oil, FMCG, pharma and engineering for many years as part of its vast global portfolio.

The pension fund said that it sold its holding in Petronet LNG after its investment committee approved the divestment of existing stake and blocking of future investments in this company in October 2012 to make its portfolio compliant to the Iran Act.

Petronet LNG Ltd is a company promoted by BPCL, GAIL, IOC and ONGC. “In October, 2012, the CalPERS investment committee approved divestment of shares in Petronet LNG Ltd. The company has failed to respond to multiple CalPERS attempts for engagement in relation to the Iran Act,” it said.