Adani’s market losses top $100 billion as shelved stock sale surprises investors

NEW DELHI/MUMBAI (Reuters) – Shares of India’s Adani Group plunged on Thursday after it abandoned a $2.5 billion public offering for its flagship company Adani. Market losses for conglomerates ballooned to more than $100 billion, raising concerns about potential systemic impacts.

Withdrawal of Adani Enterprises (ADEL.NS) stake sale minimizes dramatic setback for Gautam Adani. Gautam Adani, a school dropout turned billionaire whose fortune has grown rapidly in recent years, has slumped in the past week after a US-based short sale. Published an important research report.

These events are embarrassing turns for Adani, which has forged partnerships with foreign giants such as France’s TotalEnergies (TTEF.PA) and investors such as Abu Dhabi’s International Holding Company. Power.

Adani canceled the sale of shares late Wednesday as the stock market crash sparked by Mr Hindenburg’s criticism of the short seller intensified even though it was fully tendered on Tuesday.

Adani Enterprises plunged nearly 20% on Thursday, trading at its lowest since March 2022. Other group companies were also under pressure – Adani Ports and Special Economic Zone (APSE.NS) fell 5%, Adani Total Gas (ADAG.NS), Adani Green Energy (ADNA.NS), Adani Transmissions (ADAI.NS) each fell 10%.

The group has lost almost half of its market capitalization since Hindenburg’s report was released on January 24th. Adani Enterprises alone, dubbed the incubator of Adani’s business, lost $24 billion in market capitalization.

Adani, 60, is also not the richest person in Asia, slipping from third last week to 16th in the world’s richest rankings, according to the Forbes list.

“If Adani doesn’t regain the trust of institutional investors, the stock will plummet,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities.

Adani’s plunging stock has raised concerns about its potential for wide-ranging effects on India’s financial system.

The central bank of India has asked local banks for details of their exposure to Adani Group companies, government and banking sources told Reuters on Thursday. CLSA estimates that the Indian bank was exposed to about 40% of Adani Group’s INR 2 trillion ($24.53 billion) debt in his financial year ending March 2022.read more

Citigroup’s (CN) Wealth Unit has decided to stop offering margin loans to clients on Adani Group securities and reduce the loan value ratio of credit on Adani securities to zero on Thursday, sources said. Told.

“We see the market losing confidence in how to determine where the bottom is, and although there is a short-covering rebound, more commercial banks may cut or cut margins,” said Monica Xiao. “Given that the The Chief Investment Officer (CIO) of Hong Kong-based credit fund Triada Capital said:

In New Delhi, opposition lawmakers have submitted a notice to the Indian parliament demanding a discussion on the US short-selling report. The parliamentary party demanded the establishment of a joint parliamentary committee or demanded that the Supreme Court oversee investigations into the matter.

Adani vs Hindenburg

Hindenburg’s report last week alleges improper use of offshore tax havens and stock manipulation by Adani Group. Concerns were also raised about the large amount of debt and the valuation of Adani’s seven publicly traded companies.

Adani Group denied the accusation, saying the short seller’s allegations of stock manipulation were “baseless” and stemmed from ignorance of Indian law. The group has always made the necessary regulatory disclosures, he added.

Earlier this week, Adani Group said it had the full backing of investors, but investor confidence has waned in recent days.

Adani was able to secure an offer to sell shares on Tuesday even though the market price of the stock was below the issue price as the stock price plummeted after the publication of the Hindenburg report. But on Wednesday, stocks plummeted again.

Maybank Securities, Abu Dhabi Investment Authority and Life Insurance Corporation of India (LIFI.NS) bid for the anchor part of the issuance. These investments will be returned by Adani.

In a late Wednesday announcement, the billionaire said he was withdrawing the stock sale because the company’s “share price fluctuates during the day.” I felt there was no way forward. It was morally right.”

Earlier on Thursday, Adani said in a video address, “My investors’ interests are my first priority and everything is secondary. We have withdrawn the sale.”

Reporting by Chris Thomas, Nallur Sethuraman, Tanvi Madan, Ira Dugal, Aftab Ahmed, Sumeet Chatterjee, Anshuman Daga, Summer Zhen. Written by Aditya Kalra. Edited by Muralikumar Anantharaman

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