Under-attack Indian tycoon Gautam Adani says his conglomerate’s fundamentals are ‘strong’ even as company shares plunge again after group cancels billion-dollar stake sale said Thursday.
Adani’s empire lost more than $100 billion last week following an explosive accounting fraud allegation by US short-selling firm Hindenburg Research.
The sale of Adani Enterprises shares was intended to raise approximately $2.5 billion to reduce long-concerned debt levels and expand its shareholder base.
But as market prices dipped below the range of the offer, smaller investors were turned away, with support from Abu Dhabi-based International Holding Company and fellow Indian investors, Bloomberg citing unnamed sources. It was fully subscribed only after being assisted by heavyweights Sajan Jindal and Sunil Mittal. .
Still, Adani Enterprises shares plunged another 28.45% in Mumbai on Wednesday.
The trigger was news that Swiss banking giant Credit Suisse had stopped accepting Adani bonds as collateral for loans to private banking customers, Bloomberg reported.
Adani Enterprises suffered a further 10% loss and its shares and several other Adani companies were halted from trading.
Adani Enterprises’ board of directors said in a late-night statement that it had decided not to proceed with the share sale “in the interest of its subscribers” and that all payments would be refunded.
The company said it was “morally wrong” to proceed with the matter.
Adani himself released a video statement on Thursday, claiming that “our fundamentals are very strong, our balance sheet is healthy and our assets are solid.”
Adani’s dwindling personal fortune knocked him out of the top 10 of Forbes’ real-time rich list, where he was overtaken by fellow Indian Mukesh Ambani as Asia’s richest man.
– “Serious investigation” –
Adani, a 60-year-old publicity reluctant, has seen his empire expand at breakneck speed, with the stock of Adani Enterprises skyrocketing by more than 1,000% over the past five years.
That made him the third richest person in the world last week, behind only Elon Musk and Bernard Arnault of France and his family.
According to Hindenburg Research, Adani artificially boosted the share price of its units by funneling funds into the stock through offshore tax havens.
This “brazen stock manipulation and accounting fraud scheme” is “the biggest fraud in corporate history,” Hindenberg said in a report.
Adani released a 413-page statement Sunday saying it was the victim of a “viciously mischievous” reputational attack and said Hindenburg’s allegations were “nothing more than a lie.”
Hindenburg, which profitably bets on falling stock prices, said Adani’s statement did not answer most of the questions raised in the report.
Critics say Adani’s close relationship with Prime Minister Narendra Modi has helped him win business and avoid proper regulatory oversight.
Modi, who, like Adani, is also from Gujarat, has not publicly commented since Hindenburg’s allegations. Analysts say he’s hurting India’s image in the same way he’s trying to keep foreign investors away from China.
The company’s many interests include ports. The company took control of Israel’s largest ports this week, including telecommunications, airports, media, coal, oil and solar power.
India’s opposition parliament this week called for a “serious investigation” into Adani’s company by the central bank and regulators following the Hindenburg allegations.
“Did the Modi government choose to turn a blind eye to the illicit activities of its favorite business groups, despite all its stance on black money?” Congress said.