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New Delhi: Adani Enterprises has called off its $2.5 billion share sale due to current market conditions, the company announced on Wednesday, days after a rout of its shares following criticism from a seller short American.
“Given the unprecedented situation and current market volatility, the company aims to protect the interests of its investment community by returning the proceeds from the FPO and withdrawing the completed transaction,” the company said in a statement. .
On Tuesday, Adani Group rallied investor support for the sale of Adani Enterprises shares, in what some saw as a boost to investor confidence in a time of crisis.
But selling in Adani Group stocks and bonds resumed on Wednesday, with shares of Adani Enterprises plunging 28% and Adani Ports and the Special Economic Zone falling 19%, the worst day on record for the two.
SEBI reviews stock rout
India’s market regulator, the Securities and Exchange Board of India (SEBI), is looking into a rout of shares in billionaire Gautam Adani’s companies, a source with direct knowledge told Reuters, as losses triggered by a scathing report on sellers US shorts exploded on Wednesday for $86 billion.
SEBI is also reviewing several of the allegations made by Hindenburg Research and any potential improprieties in a sale of key shares by flagship Adani Enterprises on Tuesday, the source said, speaking on condition of anonymity.
Spokespersons for SEBI and the Adani Group did not immediately respond to requests for comment.
Among several allegations, Hindenburg accused the Adani Group last week of using offshore tax havens and manipulating stocks. It also raised concerns about the high level of debt and valuations of the seven listed Adani companies.
The group denied the allegations, saying the short seller’s account of stock manipulation had “no basis” and stemmed from ignorance of Indian law. It has always made the necessary regulatory disclosures, he added.
On Tuesday, Adani Group mustered investor support for a $2.5 billion share sale for Adani Enterprises, in what some saw as a boost to investor confidence in a time of crisis.
But the slump in Adani Group stocks and bonds resumed on Wednesday, with shares of Adani Enterprises plunging 28% and Adani Ports and the Special Economic Zone falling 19%, the worst day on record for the two .
The losses mark a dramatic setback for Gautam Adani, the dropout-turned-billionaire whose fortunes have grown rapidly in recent years, in line with the stock values of his businesses which include ports, airports, mining and cement.
Now the tycoon – who slipped from the top 10 on Forbes’ rich list on Wednesday – is battling to stabilize his businesses and defend his reputation.
Underscoring nervousness in some quarters, Bloomberg reported that Credit Suisse had stopped accepting bonds from Adani Group companies as collateral for margin lending to its private banking clients. Credit Suisse had no immediate comment.
Deven Choksey, managing director of KRChoksey Shares and Securities, said that was a big factor in Wednesday’s stock slides.
After losing $86 billion in recent days – or 16% of India’s annual budget outlay of $550 billion announced on Wednesday – the seven listed entities of the Adani Group now have a combined market capitalization of around $131 billion. .
Exits
Indian credit rating agency ICRA Ltd, a unit of Moody’s Investors Service, said on Wednesday it was monitoring the impact of developments on its Adani Group-rated portfolio.
He added that while the group’s large debt-funded capital expenditure plan was a “major challenge”, some of it was discretionary in nature and could be postponed, depending on the liquidity position.
An Australian regulator said Wednesday it would also review Hindenburg’s allegations to see if further investigations were warranted.
Wednesday’s stock losses saw Adani slip to 15th on Forbes’ rich list with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd, who stands ranks ninth with a net worth of $83.7 billion.
Prior to Hindenburg’s report, Adani had placed third.
Asked if he was concerned about bigger losses in Indian stock markets due to the fall in Adani Group shares, Economic Affairs Secretary Ajay Seth said the government “does not comment on issues related to a particular company”.
India’s benchmark Nifty has fallen 2.7% since the Hindenburg report. The data also showed foreign investors net $1.5 billion off Indian stocks after the report – the biggest four-day outflow since September 30.
Shares of Adani Power and Adani Wilmar fell 5% each on Wednesday, and Adani Total Gas fell 10% as all three fell from their daily price limits. Adani Transmission fell 3% and Adani Green Energy 5.6%.
Adani Total Gas, a joint venture with France’s Total, was the biggest victim of the short sellers report, losing an estimated $27 billion.
Shares in cement companies ACC and Ambuja Cements, which the Adani Group bought from Switzerland’s Holcim for $10.5 billion last year, fell 6.2% and 16.7% respectively.
Dollar bonds issued by Adani entities also resumed their slide on Wednesday. Adani Ports’ US dollar-denominated bonds maturing in February 2031 led the losses, falling 3.59 cents to 67.58 cents.
Hindenburg said in his report that he had shorted US bonds and non-Indian derivatives traded from the Adani Group.
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