Hugh Young takes 10% hit from Satyam exposure

Hugh Young’s New India Investment trust has written down its portfolio 10% as shares in its third largest holding, Satyam, collapsed under the weight of an accounting scandal.

The company saw its NAV fall 9.43% between the sixth and seventh of January as Satyam tumbled from 373.14 rupees per share to 43 rupees, or more than 88%.

The collapse of computer service business Satyam, over a long-term accountancy fraud estimated to be worth more than £1 billion, drove down the MSCI India Index 7.54% overnight.

Until then the trust had relatively astutely avoided the falls of the Indian stock market, losing 5.4% over the previous six months versus an index loss of 16.3%.

The £64.82 million fund is currently trading at a 14.9% discount to NAV at 112.3p per share.

Young is the brains behind Aberdeen Asset Management’s famous team process, and is highly influential within the company despite its aversion to ‘star manager’ culture.

Satyam has been described as India’s Enron and the shockwaves from the admission by founder and chairman B. Ramalinga Raju that he had embezzled money over a period of many years shook faith in its economy.

Last week, the scandal also claimed the head of audit at PricewaterhouseCoopers India as the company admitted its culpability in the fraud.

Two other partners at the firm have been suspended from duty while being held in Indian custody awaiting a bail hearing. Satyam shares had recovered slightly yesterday to 55 rupees as competitors announced their interest in an offer for the business.