Adani’s losses in the market exceeded $100 billion as investors were wary of selling shares

NEW DELHI/MUMBAI (Reuters) – Adani Group’s losses in the market swelled to more than $100 billion on Thursday, raising concerns about its potential systemic impact, a day after its parent company abandoned a $2.5 billion equity offering.

The withdrawal of Al-Adani Company (ADEL.NS) The share sale is a dramatic setback for company founder Gautam Adani, a school dropout turned billionaire whose fortunes have risen rapidly in recent years, but plummeted in just a week after US short-seller Hindenburg published a critical research report.

The billionaire’s move to abort the stock sale has had an impact on markets, politics and business. Adani shares plunged, opposition MPs called for a broader investigation and the central bank started taking action to check banks’ exposure.

Meanwhile, Citigroup’s (CN) The Wealth unit has stopped providing margin loans to its clients against Adani Group securities.

Adani has established partnerships with foreign giants such as France’s TotalEnergies (TTEF.PA) He has attracted investors such as Abu Dhabi International Holding Company as he pursues global expansion that stretches from ports to the energy sector.

In a surprise move late Wednesday, Adani called off the stock sale as the stock rout sparked by the Hindenburg criticism intensified, despite being fully undersubscribed the day before.

“Adani may have started a crisis of confidence in Indian stocks and this could have broader market implications,” said Ipek Ozkardskaya, senior market analyst at Swissquote Bank.

Shares of Adani Enterprises plunged 27% on Thursday, closing at their lowest level since March 2022.

Other group companies also lost more ground, with losses of 10% in Adani Total Gas (ADAG.NS)prepare me for green energy (ADNA.NS) He promised me a transfer (ADAI.NS)While the ports of Al-Adani and the Special Economic Zone (APSE.NS) shed approximately 7%.

Since the Hindenburg Report on Jan. 24, the group’s companies have lost nearly half of their combined market value. Adani Enterprises – billed as Adani’s business incubator – has lost $26 billion of its market capital.

Adani is also no longer the richest person in Asia, dropping to 16th in Forbes’ rankings of the world’s richest people, with his net worth nearly halving to $64.6 billion in a week.

The 60-year-old ranked third on the list after billionaires Elon Musk and Bernard Arnault.

His rival is Mukesh Ambani of Reliance Industries (RELI.NS) He is now the richest person in Asia.

broader concerns

The plunge in Adani’s stock and bond prices has raised concerns about a possible broader impact on India’s financial system.

Government and banking sources told Reuters on Thursday that India’s central bank has asked local banks for details of their exposure to the Adani group.

CLSA estimates that Indian banks were exposed to about 40% of the $24.5 billion in debt of the Adani Group in the fiscal year to March 2022.

Dollar bonds issued by Adani Group entities extended losses on Thursday with Adani Green Energy Ltd (ADNA.NS) Collapsing to a record low.

“We see the market losing confidence in how to measure the level of the bottom, and although there will be a shorting bounce, we expect more fundamental downside risk as more private banks (potentially) cut or lower margin,” Monica said. Hsiao, chief investment officer at Hong Kong-based trust fund Triada Capital.

In New Delhi, opposition MPs have filed notices in parliament demanding that the short seller’s report be debated.

The Congress party called for forming a joint parliamentary committee or monitoring an investigation by a supreme court, while some MPs chanted anti-aggressive slogans inside the parliament, which was adjourned today.

Adenyi vs. Hindenburg

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

The cancellation fundraising was crucial to Adani, which said it would use $1.33 billion to fund green hydrogen projects, airport facilities and green highways, and $508 million to pay down debt on some units.

The Hindenburg Report alleged improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debts and valuations of seven companies listed in “Adani”.

The Adani Group denied the accusations, saying that the allegations of stock manipulation were “baseless” and stemmed from ignorance of Indian law. She said she has always made the necessary regulatory disclosures.

Adani succeeded in securing subscriptions to sell the shares on Tuesday even though the share market price was lower than the offering price of the issue. Maybank Securities and Abu Dhabi Investment Authority made an offer to purchase the underlying part of the issue, investments that will now be reimbursed by Adani.

Late Wednesday, the group’s founder said it would pull the sale given the share price’s decline, adding that its board feels it “wouldn’t be morally right” to go ahead.

(Reporting) By Chris Thomas, Nallur Sethurman, Tanvi Mehta, Ira Duggal, Aftab Ahmed, Smit Chatterjee, Anshuman Daga, Samar Zain and Pansari Mayur Kamdar; Editing by Muralikumar Anantharaman, Jason Neely, and Alexander Smith

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