Adani’s market losses exceed $100 billion as shelved share sales spook investors

NEW DELHI/MUMBAI, Feb 2 (Reuters) – Adani Group’s market losses widened to more than $100 billion a day after its flagship company abandoned a $2.5 billion share offering, sparking speculation over its potential system. concerns about sexual repercussions.

The exit from the Adani Enterprises (ADEL.NS) share sale is a dramatic setback for founder Gautam Adani. Sellers Hindenburg published an important research report.

The cancellation of the share sale sent Adani shares plunging, opposition lawmakers called for a wider investigation and the central bank moved to check the bank’s exposure.

Citigroup’s (CN) wealth arm has stopped offering margin loans backed by Adani Group securities to its clients on Thursday and cut its credit-to-value ratio backed by Adani securities to zero, a source said. .

Adani has partnered with foreign giants such as France’s TotalEnergies (TTEF.PA) and has attracted investors such as Abu Dhabi International Holdings as it seeks global expansion from ports to power industries.

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Adani called off the share sale late on Wednesday as a stock slump fueled by criticism from short-seller Hindenburg, even though the offer was fully subscribed.

“Adani may have triggered a crisis of confidence in Indian equities, which could have broader implications for the market,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

Adani Enterprises shares plunged nearly 23% on Thursday to their lowest level since March 2022.

Other group companies also fell further, with Adani Total Gas (ADAG.NS), Adani Green Energy (ADNA.NS) and Adani Transmission (ADAI.NS) down 10% and Adani Ports and Special Economic Zone (APSE.NS) off 5%. .

Since Hindenburg’s January 1 report. 24, the total market value of the group company lost nearly half. Adani Ventures — described as the incubator for Adani Ventures — has lost $24 billion in market value.

The 60-year-old Adani is no longer Asia’s richest man either, slipping to No. 16 on the world’s richest list, with his net worth nearly halving to $66 billion in a week, according to Forbes. Adani earlier ranked third on the list, behind billionaires Elon Musk and Bernard Arnault.

His rival, Mukesh Ambani of Reliance Industries (RELI.NS), is now Asia’s richest man.

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wider attention

The slump in Adani’s share price has raised concerns about possible wider impact on India’s financial system.

Government and banking sources told Reuters on Thursday that the central bank had asked local lenders to provide details of their exposure to the Adani group.

CLSA estimates that Indian banks are exposed to about 40% of Adani Group’s $24.5 billion in debt for the fiscal year ending March more

“We’re seeing a loss of confidence in how the market is judging where the bottom might be and despite the short-covering rally, we expect more fundamental downside risk given the potential for more private banks to cut or reduce margins,” Monica said. “Hsiao, chief investment officer of Hong Kong-based credit fund Triada Capital.

In New Delhi, opposition lawmakers submitted a notice to parliament to discuss the U.S. short-seller report.

The Congress party has called for a joint parliamentary committee or the Supreme Court to oversee an inquiry into the matter. Some lawmakers chanted anti-Adani slogans in parliament, which is adjourned today.

Adani vs Hindenburg

Adani will make $13.8 billion worth of acquisitions in 2022, an all-time high and more than double the previous year, according to Dealogic data.

The canceled fundraising is crucial for Adani, which has said it will use $1.33 billion to fund green hydrogen projects, airport facilities and greenfield highways, and $508 million to pay down debt in some sectors.

Hindenburg’s report last week accused Adani Group of improperly using offshore tax havens and manipulating shares. It also raised concerns about high debt and the valuation of seven Adani-listed companies.

Adani Group has denied the allegations, saying the short-seller’s allegations of stock manipulation are “baseless” due to ignorance of Indian law.

It said the group had been making the necessary regulatory disclosures.

Adani managed to secure subscriptions for the shares on Tuesday, although the market price of the shares was below the issue price.

Maybank Securities and the Abu Dhabi Investment Authority had bid to issue the anchor tranche – the investment will now be returned by Adani.

In an announcement late Wednesday night, the group’s founder said he was withdrawing the share sale in light of the drop, adding that his board did not think “it would be morally incorrect to continue issuing shares.”

Reporting by Chris Thomas, Nallur Sethuraman, Tanvi Mehta, Ira Dugal, Aftab Ahmed, Sumeet Chatterjee, Anshuman Daga, Summer Zhen; Writing by Aditya Kalra; Editing by Muralikumar Anantharaman and Jason Neely

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