Foreigners Flee State Companies on Intervention: Corporate India

Foreign investors are cutting their holdings in India’s state-controlled companies to a three-year low as Prime Minister Manmohan Singh’s government sacrifices shareholder return to revive the weakest economy in nine years.

Overseas funds pared stakes in the 40 biggest state-owned firms to an average 7.31 percent at the end of June, the lowest level since March 2009, exchange data compiled by Bloomberg show. The Children’s Investment Fund Management, a London-based hedge fund, is suing the Indian government and Coal India Ltd., alleging state directives have hurt its investment in the miner. Oil & Natural Gas Corp., India’s largest explorer, in May said discounts offered to state refiners on crude-oil supplies cut its annual profit in half.