Adani loses crown as Asia’s richest man as shares evaporate to $86 billion

BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate tumbled again on Wednesday as his company plummeted to $86 billion after reports of short selling in the United States, The billionaire also lost his title as Asia’s richest man

Wednesday’s stock drop pushed Adani down to No. 15 on the Forbes list of the richest people, with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, chairman of Reliance Industries Ltd (RELI.NS). Mukesh Ambani ranks ninth with a net worth of $83.7 billion.

Adani ranked third ahead of a critical report by US bear Hindenburg.

The losses mark a dramatic setback for Adani, a school dropout turned billionaire whose fortune has grown rapidly in recent years in line with the stock value of his businesses, which include ports, airports, mining, cement and power. Now, the tycoon is trying to stabilize his company and defend his reputation.

In what some see as a sign of investor confidence in times of crisis, Adani Group managed to win over investors after it sold shares in flagship Adani Enterprises (ADEL.NS) for $2.5 billion.

A Hindenburg Research report last week accused the group of improper use of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuation of seven Adani-listed companies.

The group has denied the allegations, saying the short-seller’s claims of stock manipulation are “baseless” and stem from ignorance of Indian law. It added that it has been making the necessary regulatory disclosures.

Shares of Adani Enterprises, often referred to as the incubator for Adani businesses, plunged 28% on Wednesday, losing more than $18 billion since the Hindenburg report. Adani Ports and Special Economic Zones (APSE.NS) fell 19%. Both stocks marked their worst day ever.

“The kind of drop we’re seeing in Adani stock is scary,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities.

Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) fell 5% each, while Adani Total Gas (ADAG.NS) fell 10%, with all three hitting their daily limit limits. Adani Transmission (ADAI.NS) fell 3 percent and Adani Green Energy (ADNA.NS) fell 5.6 percent.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA), was the biggest victim of the short selling report, losing about $27 billion.

Dollar bonds issued by Adani entities also resumed their slide on Wednesday. Adani Ports’ dollar-denominated bonds due in February 2031 led the losses, down 3.59 cents to 67.58 cents.

Underscoring nervousness in some quarters, Bloomberg reported that Credit Suisse (CSGN.S) had stopped accepting bonds from Adani Group companies as collateral for margin loans to its private banking clients.

Deven Choksey, managing director of KR Choksey Shares and Securities, said that was a big factor in Wednesday’s slide.

Credit Suisse had no immediate comment.

Adani Group’s seven listed entities now have a combined market capitalization of about $131 billion after losing $86 billion in recent days, or 16 percent of India’s $550 billion annual budget spending announced on Wednesday.

Damaged confidence

Ambareesh Baliga, an independent market analyst based in Mumbai, said: “There was a small rebound yesterday after the completion of the stock sale, and while it looked unlikely at some point, the weaker sentiment is now after the blockbuster Hindenburg report. Market sentiment is becoming evident again.”

“The fact that the share price fell despite Adani’s rebuttal is a clear sign that investor sentiment has taken some damage. It will take a while to stabilize,” Baliga added.

Asked whether he was concerned about Indian stocks suffering more losses from the plunge in Adani Group shares, Economic Affairs Minister Ajay Seth said the government “does not comment on issues related to specific companies”.

India’s benchmark Nifty has lost 2.7 percent since the Hindenburg report. The data also showed that foreign investors sold a net $1.5 billion worth of Indian stocks after the Hindenburg report, the biggest four-day outflow since Sept. 17. 30.

The scrutiny of the conglomerate is intensifying, with Australia’s regulator saying on Wednesday it would review Hindenburg’s allegations to determine whether further investigations are warranted.

India’s markets regulator, which has been probing the conglomerate’s dealings, will include Hindenburg’s report in its own preliminary probe, sources told Reuters. Regulators have yet to comment on the Adani-Hindenburg incident.

India’s credit rating agency ICRA Ltd, a unit of Moody’s Investors Service, said on Wednesday it was monitoring the impact of the development on its rated portfolio at Adani Group. It added that while the group’s large debt-financed capex program was a “key challenge”, some of it was discretionary and could be deferred, depending on liquidity conditions.

State-run Life Insurance Corporation of India (LIC) (LIFI.NS) said on Monday it would seek clarification from Adani’s management on the short-selling report. As of end-December, LIC owned 4.23% of Adani Enterprises and over 9% of Adani Ports and Special Economic Zone. The insurance giant was also a major investor in Adani’s recent sale of shares.

Shares in cement companies ACC (ACC.NS) and Ambuja Cements (ABUJ.NS), which Adani Group bought last year from Switzerland’s Holcim (HOLN.S) for $10.5 billion, fell 6.2 percent and 16.7 percent, respectively.

In its note, Hindenburg said it had shorted U.S. bonds and Adani Group’s non-India-traded derivatives.

Reporting by Chris Thomas in Bengaluru and Aditya Kalra and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran, Nikunj Ohri and Sethuraman NR; Editing by Edwina Gibbs and Mark Potter

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