India’s Adani firms lose $65bn in value – Al Jazeera English IG News

IG news Update,

Most Adani Group shares fell sharply on Monday as the Indian conglomerate’s rebuttal to criticism of the US short seller failed to calm investors, triggering a market collapse that has now wiped $65 billion off the group’s share values. .

Led by Asia’s richest man Gautam Adani, the Indian conglomerate has locked horns with Hindenburg Research and on Sunday hit back at last week’s report on short sellers, raising concerns about its debt levels and use of tax havens. Went.

Adani said it complies with all local laws and has made necessary regulatory disclosures.

Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power and Adani Wilmar fell between 5 per cent and 20 per cent on Monday.

Flagship Adani Enterprises, which faces a crucial test this week with a follow-on share offer, swung between gains and losses before ending 4.8 per cent higher. This was well below the offer price of the issue, which, if successful, would have been the largest ever share offering in India.

Adani Enterprises’ $2.5 billion secondary share sale closed for the second day amid weak investor sentiment. The stock closed at Rs 2,892.85 ($35.47), down 7 per cent from the lower end of the offer price band of Rs 3,112 ($38.17). The upper band is Rs 3,276 ($40.17).

Data from stock exchanges on Monday showed Adani has now received bids for 1.4 million shares, or just over 3 per cent of the 45.5 million shares on offer. The deal closes on Tuesday.

According to the data, foreign and domestic institutional investors as well as mutual funds have not placed any bids so far.

“Retail participation is likely to remain subdued due to fall in offer price and sentiment still on hold due to Hindenburg controversy,” said Hemang Jani, Equity Strategist, Motilal Oswal Financial Services.

“While there is a risk that the share sale does not materialize today, it will be important to wait and see how institutional investors participate.”

Abu Dhabi Group International Holding Company said on Monday it would invest 1.4 billion dirhams ($381.17 million) in the offering.

share sale on schedule

Adani Group told Reuters in a statement on Saturday that the sale remained on schedule at the planned issue price, even as sources said bankers of the country’s biggest-ever secondary share sale would seek an extension of the deadline beyond January 31. Were considering doing or changing the prices. Fall in its share price.

India’s regulations stipulate that the share offering must receive a minimum subscription of 90 per cent, and if it does not, the issuer must return the entire amount. Maybank Securities and Abu Dhabi Investment Authority were among the investors who bid for the anchor portion of the issue.

Maybank said in a statement that it had “no financial impact” as the subscription to Adani’s offer was entirely funded by client funds.

India’s state-owned Life Insurance Corporation (LIC) told Reuters on Monday it was reviewing Adani Group’s response to the Hindenburg report and would hold talks with management within a few days.

LIC took 5 percent of the $734 million anchor share. It already holds 4.23 per cent stake in the flagship Adani firm, while its other exposures include 9.14 per cent stake in Adani Ports and 5.96 per cent in Adani Total Gas.

LIC Managing Director Raj Kumar said, “Since we are big investors, we have the right to ask relevant questions.”

trading less

US dollar-denominated bonds issued by Adani Ports and Special Economic Zones continued to decline for a second week, with bonds maturing in August 2027 down 5 cents to 73.03 cents, the lowest since June 2020. The group’s other dollar-denominated bonds were also trading lower.

Index provider MSCI has said it was seeking feedback from market participants on Adani and was monitoring factors that “may affect the eligibility of those relevant securities” in the MSCI index.

In its response on Sunday, Adani highlighted its relationships with local and international banks and its access to diverse funding sources and structures, with US banks Citigroup and JP Morgan Chase & Co as well as BNP Paribas, Credit Suisse, Deutsche Bank , including other lenders listed. Barclays and Standard Chartered.

The stock market meltdown has come as a dramatic blow to 60-year-old Adani. The school-dropper’s astonishing rise saw some of his group’s shares gain more than 1,500 per cent in three years, making him the world’s third-richest person before slipping to eighth place on Monday’s Forbes list.

Responding to Adani’s rebuttal, Hindenburg said the company’s response “largely confirms our findings and ignores our key questions”.

Hindenburg said in his report that Adani companies had “substantial debt” and that the shares of seven Adani-listed companies fell by 85 percent at what it called “sky-high valuations”.

Adani’s response said that over the past decade, its group companies have “consistently de-lever”.

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