MUMBAI (Reuters) – Shares of India’s Adani Enterprises (ADEL.NS) It sank nearly 20 percent on Friday as a scathing report from a US short seller triggered a rout in the conglomerate’s listed companies, casting doubt on how investors will respond to the company’s record $2.45 billion in sales.
Seven companies included in the Adani Group – which is controlled by one of the world’s richest men Gautam Adani – have lost a total of $45 billion in market value since Wednesday, with Adani’s US corporate bonds also tumbling after Hindenburg Research cited concerns in a Jan. 24 report. About debt levels and the use of tax havens.
The track acquired shares of Adani Enterprises, the group’s flagship company, well below the offer price for the secondary sale that began on Friday.
Two sources told Reuters that the Securities and Exchange Board of India (SEBI), the country’s capital markets regulator, is studying the Hindenburg report and may use it to help its ongoing investigation into the Adani Group’s offshore fund holdings. There was no immediate comment from spokesmen for the organizing body. Read more
The Adani Group dismissed the Hindenburg report as baseless and said it was considering whether to take legal action against the New York-based company. It did not immediately respond to a request for comment on the SEBI investigation.
With a net worth of $97.6 billion, billionaire Gautam Adani is now the seventh richest man in the world, according to Forbes, down from the third place he held before the Hindenburg Report.
Adani met Provincial Power Minister RK Singh on Friday in New Delhi, according to an informed source. The agenda of the meeting was not immediately known.
The billionaire hails from the western state of Gujarat, the home country of Prime Minister Narendra Modi. India’s main opposition Congress party has long accused Adani and other billionaires of receiving preferential political treatment from the Modi federal administration.
The stunning sell-off in the market overshadowed the sale of Adani Enterprises shares. The main part of the sale saw participation from investors, including the Abu Dhabi Investment Authority, on Wednesday.
“There have been heavy positions in (shares of) the Adani Group, the way they have risen in the past two years,” said Neeraj Dewan, a director at Quantum Securities in New Delhi.
“This is a classic case of panic selling,” he said, noting that fears are also spreading across Indian banks of debt exposure to the Adani Group.
Tracking index of state-run banks (.NIFTYPSU) The main Nifty Bank index fell by 6.6% (.NSEBANK) decreased 3.5%.
CLSA estimates that Indian banks were exposed to about 40% of the 2 trillion rupees ($24.53 billion) of Adani Group debt in the fiscal year to March 2022.
As of 0818 GMT, investors, mostly retail, had bid to buy about 266,000 shares in Adani Enterprises, compared to 45.5 million offered, according to BSE stock exchange data. Bids for retail investors will close on January 31st.
The stock sale is managed by Jefferies, India’s SBI Capital Markets, Axis Capital, ICICI Securities, and others.
The company set a minimum share price of 3,112 rupees ($38.22) and a maximum price of 3,276 rupees. But on Friday, the stock fell to Rs 2,721.65 – well below the minimum bid.
Shares of other listed companies also declined, with Adani Transmission Ltd (ADAI.NS) Take me back to Total Gas (ADAG.NS)Come back to green energy (ADNA.NS) and Adani Ports (APSE.NS) Sinking 20% each.
“The sell-off is very intense…it has clearly affected the general investor sentiment in the market,” said Saurabh Jain, assistant vice president – research at SMC Global Securities.
Hindenburg said in its report that the main companies listed in the Adani Group have “significant debts,” which puts the group on an “unstable financial footing,” and that “high valuations” have pushed the share prices of seven Adani-listed companies to 85. % exceed the actual value.
Billionaire US investor Bill Ackman said Thursday that he found the Hindenburg Report “extremely reliable and very well researched.”
Hindenburg said it has held short positions in Adani through its US-traded bonds and non-India derivatives instruments, meaning it is betting its price will fall.
Dollar bonds issued by Indian Adani Group entities fell on Friday. Read more
Adani Group has repeatedly faced concern about debt levels. She defended herself in a presentation titled “Myths of the Short Seller” on Thursday, saying deleveraging by promoters — or major shareholders — was “in a high growth phase.”
Jefferies said in the client note that the Adani Group had shared details of debt and leverage levels, and that it did not “see material risks arising from the Indian banking sector”.
Jefferies said the total combined debt of the Adani Group was 1.9 trillion rupees ($23.34 billion).
Adani said her debt is at a manageable level and no investor has expressed any concerns.
Adani Group has diversified its business interests and last year bought ACC Cement Companies (ACC.NS) and Ambuja cement (ABUJ.NS) from the Swiss company Holcim Favorite For $10.5 billion. ACC is down 15% on Friday, while Ambuja is down as much as 25%.
(Report) by M. Sriram and Chris Thomas; Editing by Aditya Kalra, Christopher Cushing, and Kim Coghill
Our standards: Thomson Reuters Trust Principles.
“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”