Selloff in Adani Group Stocks Wipes Out $47 Billion in Market Value
Shares of several companies linked to India’s richest man,
Gautam Adani,
fell sharply Friday, losing tens of billions of dollars in market value after a U.S. short seller’s allegations of fraud at his sprawling conglomerate continued to unnerve investors.
Five of the seven listed
Adani Group
512599 -18.52%
companies ended the day 16% to 20% lower, and the other two fell by the maximum 5% permitted by India’s exchanges for their stocks. The market’s benchmark Nifty 50 index, which includes two Adani companies, fell to a three-month low.
The declines were much steeper than two days ago, when the Adani stocks fell hours after Hindenburg Research published a lengthy report alleging numerous malpractices at the Indian billionaire’s namesake conglomerate. India’s stock market was closed on Thursday for a public holiday.
Adani Group on Thursday called Hindenburg’s fraud allegations baseless and accused the short seller of trying to smear its reputation and derail a public stock offering by one of its companies. It said the volatility in Indian stock markets created by the report has “led to unwanted anguish for Indian citizens.” The group also said it is considering legal action against the U.S. firm.
Together, the seven Adani companies have lost the equivalent of around $47 billion in market value since Hindenburg’s report was published. They had a total market capitalization of about $217 billion earlier this week, according to FactSet.
Some market participants blamed Friday’s selloff partly on a tweet by U.S. hedge-fund manager
Bill Ackman,
another high-profile short seller, that expressed support for Hindenburg.
Mr. Ackman, who said he doesn’t have a position in any Adani companies, said he had found the Hindenburg report “highly credible and extremely well researched.”
An Adani spokesperson on Friday said the group didn’t have an immediate comment on the stock selloff.
Mr. Ackman’s tweet may have spooked investors who had initially taken a cautious approach to the Hindenburg report, said Brian Freitas, founder of research firm Periscope Analytics. He added that investors have also been waiting to see if the Adani Group would provide specific rebuttals to at least some of the allegations of fraud.
Mr. Freitas said the conglomerate was long seen as untouchable and was able to control its own narrative for a long time, despite facing other allegations of fraud in previous years. “That’s kind of broken now,” Mr. Freitas added.
Adani Enterprises Ltd., the group’s flagship company, is in the process of raising the equivalent of $2.5 billion via a follow-on public share sale. On Friday, it opened the offering to individual investors in the country, and is expects to close subscriptions on Jan. 31.
Adani Enterprises said it has already secured commitments for the deal from more than 30 so-called anchor investors, including several international securities firms, the Abu Dhabi Investment Authority,
Life Insurance Corp. of India
and
SBI Life Insurance Co.
Ltd.
The company had set a floor of 3,112 Indian rupees—equivalent to $38—a share for the offering. Its shares closed around 11% below that price on Friday.
Hindenburg, which was founded by Nathan Anderson, said in its report that it is betting against Adani’s U.S. dollar bonds and non-Indian-traded derivatives. The bonds have also fallen in price in recent days, sending their yields higher.
Mr. Adani, 60 years old, has built a business empire with assets that include airports, renewable energy projects, coal mines, cement producers and ports. He ranks as one of the world’s richest men, thanks to the large increase in the value of his companies in recent years.
Write to Weilun Soon at [email protected] and Shan Li at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Shares of several companies linked to India’s richest man,
Gautam Adani,
fell sharply Friday, losing tens of billions of dollars in market value after a U.S. short seller’s allegations of fraud at his sprawling conglomerate continued to unnerve investors.
Five of the seven listed
Adani Group
512599 -18.52%
companies ended the day 16% to 20% lower, and the other two fell by the maximum 5% permitted by India’s exchanges for their stocks. The market’s benchmark Nifty 50 index, which includes two Adani companies, fell to a three-month low.
The declines were much steeper than two days ago, when the Adani stocks fell hours after Hindenburg Research published a lengthy report alleging numerous malpractices at the Indian billionaire’s namesake conglomerate. India’s stock market was closed on Thursday for a public holiday.
Adani Group on Thursday called Hindenburg’s fraud allegations baseless and accused the short seller of trying to smear its reputation and derail a public stock offering by one of its companies. It said the volatility in Indian stock markets created by the report has “led to unwanted anguish for Indian citizens.” The group also said it is considering legal action against the U.S. firm.
Together, the seven Adani companies have lost the equivalent of around $47 billion in market value since Hindenburg’s report was published. They had a total market capitalization of about $217 billion earlier this week, according to FactSet.
Some market participants blamed Friday’s selloff partly on a tweet by U.S. hedge-fund manager
Bill Ackman,
another high-profile short seller, that expressed support for Hindenburg.
Mr. Ackman, who said he doesn’t have a position in any Adani companies, said he had found the Hindenburg report “highly credible and extremely well researched.”
An Adani spokesperson on Friday said the group didn’t have an immediate comment on the stock selloff.
Mr. Ackman’s tweet may have spooked investors who had initially taken a cautious approach to the Hindenburg report, said Brian Freitas, founder of research firm Periscope Analytics. He added that investors have also been waiting to see if the Adani Group would provide specific rebuttals to at least some of the allegations of fraud.
Mr. Freitas said the conglomerate was long seen as untouchable and was able to control its own narrative for a long time, despite facing other allegations of fraud in previous years. “That’s kind of broken now,” Mr. Freitas added.
Adani Enterprises Ltd., the group’s flagship company, is in the process of raising the equivalent of $2.5 billion via a follow-on public share sale. On Friday, it opened the offering to individual investors in the country, and is expects to close subscriptions on Jan. 31.
Adani Enterprises said it has already secured commitments for the deal from more than 30 so-called anchor investors, including several international securities firms, the Abu Dhabi Investment Authority,
Life Insurance Corp. of India
and
SBI Life Insurance Co.
Ltd.
The company had set a floor of 3,112 Indian rupees—equivalent to $38—a share for the offering. Its shares closed around 11% below that price on Friday.
Hindenburg, which was founded by Nathan Anderson, said in its report that it is betting against Adani’s U.S. dollar bonds and non-Indian-traded derivatives. The bonds have also fallen in price in recent days, sending their yields higher.
Mr. Adani, 60 years old, has built a business empire with assets that include airports, renewable energy projects, coal mines, cement producers and ports. He ranks as one of the world’s richest men, thanks to the large increase in the value of his companies in recent years.
Write to Weilun Soon at [email protected] and Shan Li at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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