CalPERS dumps Indian oil stocks on Iran concerns

The US-based California Public Employees’ Retirement System (CalPERS), one of the world’s largest pension funds, has flagged concerns over investments in shares of various Indian oil companies, including Oil India and Petronet LNG, due to their Iran-related business interests.

CalPERS, which manages investments of $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.

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

Currently, CalPERS has no investments in the shares of either Oil India or ONGC. However, it has decided to continue with its $4.6 million worth investment in shares of another Indian energy company BPCL, after the oil marketing major communicated to it 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 due to its alleged nuclear weapon programme. Last week, Iran pitched for deeper bilateral ties and increased cooperation in security and economic area with India, saying that the two countries face “common threats and interests”.

CalPERS, which is a public pension fund providing retirement and health benefit programme 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 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.