Adani group’s market losses hit $100B as stocks sink. The shares of India’s Adani group fell on Thursday as the Gautam Adani-led conglomerate postponed a $2.5 billion share sale in the midst of a speculative market, pushing its total market capitalization losses since last week’s short-seller attack to $100 billion.
The cancellation of the share sale by Adani Enterprises (ADEL.NS) is a significant blow for Adani, the millionaire school dropout whose wealth increased quickly in recent years in line with the stock values of his companies.
Despite the offer being completely subscribed on Tuesday, Adani cancelled the share offering on Wednesday as a stock rout prompted by U.S. short-seller Hindenburg’s objections escalated. Adani has also lost his position as Asia’s richest man as a result of the short sealer’s attack.
Adani group’s market losses hit $100B as stocks sink. The group’s flagship firm – Adani Enterprises (ADEL.NS) – plunged 10% after opening higher on Thursday. Other group companies – Adani Ports and Special Economic Zone (APSE.NS), Adani Total Gas (ADAG.NS), Adani Green Energy (ADNA.NS) and Adani Transmission (ADAI.NS) – fell 10% each, while Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) dropped 5% each.
An unpleasant turn of events for the billionaire who has partnered with foreign parties in his global expansion of industries ranging from ports to mining to cement is the stock market crash and postponement of the share sale.
Adani dropped from third place last week to 16th on Forbes’ list of the world’s wealthiest people.
Government and banking sources told Reuters on Thursday that India’s central bank has requested information from regional banks regarding their exposure to the Adani group of enterprises. According to CLSA, for the fiscal year ending in March 2022, the Adani Group’s 2 trillion rupees ($24.53 billion) debt was exposed to around 40% by Indian banks.
The Adani group said earlier this week that it had the full support of investors, but since, investor trust has waned.
According to a source with firsthand knowledge of the situation on Thursday, the wealth division of Citigroup (C.N) no longer offers its clients margin loans secured by securities of the Adani Group. Citi opted not to respond.
The Adani group was accused of stock manipulation and inappropriate use of offshore tax havens in Hindenburg’s research from last week. High debt and the values of seven listed Adani companies were other issues that were brought up.
The Adani group has denied the accusations, saying the short-sellers allegation of stock manipulation has “no basis” and stems from an ignorance of Indian law. The group has always made the necessary regulatory disclosures, it added.
Despite the fact that the stock’s market price was below the issue’s offer price on Tuesday as shares fell following the release of the Hindenburg report, Adani was nevertheless able to secure the subscriptions for the share sale. However, on Wednesday, stocks fell once again.
In a late-night announcement on Wednesday, Adani said he was withdrawing the share sale as the company’s “stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct.”
