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Adani loses $71 billion as spat with Hindenburg heats up

BNE News Desk


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Gandhinagar: As stock market losses worsen and important dollar bonds hit new lows, billionaire Gautam Adani's 413-page attempt to regain investors' faith in his corporate empire is failing.

The majority of Adani Group companies saw their shares decline on Monday despite the Indian conglomerate's extensive weekend denial of the short seller's charges of fraud. A share offering by Adani's flagship that was intended to highlight the tycoon's ascent on the international stage coincided with the three-day selloff and has since destroyed nearly 571 billion in market value.

While the Adani Group has depicted Hindenburg's accusations as unfounded and an attack on India itself, the latter's study is reviving long-standing investor concerns about the conglomerate's corporate governance. The issue also poses a risk of eroding public confidence in India, which was until recently one of Wall Street's top investment destinations, and accelerating a developing trend toward a reopening China.

The risk-reward for Indian markets has recently changed negatively, according to Saxo Capital Markets strategist Charu Chanaria. "Foreign investor trust has been weakened and will take time to restore, so would be rather wary. India anyway started this year trading at a premium to other EMS, and the Adani crisis has one again called into question if that is justified."

The selloff is also rapidly reducing the fortune of Adani, the richest man in Asia, despite the fact that his equities were among the top performers last year on both the local market and the more comprehensive MSCI Asia Pacific Index.

Adani Enterprises Ltd., the flagship, as well as Ambuja Cements Ltd. recovered after the ports-to-cement conglomerate's refutation of Hindenburg's fraud charges. However, the general selloff continued on Monday with Adani Total Gas Ltd. and Adani Transmission Ltd down as much as 20% once more. However, there were hints of a divide growing among traders.

As of 12.20 p.m. in Mumbai, six of the ten equities in the Adani group were trading lower, with Adani Enterprises up 4% following an earlier increase of as high as 10%. Shares of it continue to trade below the follow-on equity offering floor price. To raise $2 billion, the company has to raise 200 billion rupees.

Just 2% of the shares offered by Adani Enterprises have been subscribed to as of Monday at 12:06 p.m. in Mumbai; the offer closes on Tuesday. The shares offered for retail investors had received bids for 3% of them, whereas the shares offered for the employees of the company had received bids for 8% of them. The non-institutional portion, which consists of affluent people, made up 1% of the total. A small portion of the 12.8 million shares up for bid, or 4,576, were placed by institutional investors.

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BNE News Desk