Energy tycoon’s woes spur anger in stock turmoil
NEW DELHI — Hundreds of demonstrators from India’s main opposition party turned out Monday in India’s capital New Delhi and other cities demanding an investigation into allegations of fraud and stock price manipulation by India’s second-biggest business group, headed by coal mining tycoon Gautam Adani.
The Adani Group said Monday that its major investors, known in India as “promoters,” had pledged to prepay $1.1 billion in share-backed loans due for repayment by September 2024. The repayments include shares in Adani’s ports business, Adani Green Energy and Adani Transmission.
Shares in Adani Ports & Special Economic Zone jumped 9 percent after the announcement.
Members of the opposition Congress party have been urging Prime Minister Narendra Modi to order an investigation into Adani Group companies after a U.S.-based shortselling firm, Hindenburg Research, accused them of fraudulent practices. The Adani group has denied any wrongdoing.
In New Delhi, Congress Party workers threw fake currency notes in the air and chanted slogans. Some burnt a suitcase plastered with images of Prime Minister Narendra Modi and Adani.
Opposition party workers in the financial capital, Mumbai, and in the southern city of Chennai gathered outside a state-run bank and the country’s largest insurer, which known to have investments in Adani shares.
So far, there is no sign the fracas was spreading across India’s financial sector and the protests are more a reflection of political theater rather than spontaneous public outrage. Lawmakers disrupted Parliament proceedings for a third day on Monday as calls mounted for India’s market regulator to look into Hindenburg’s claims.
Adani and his companies have lost tens of billions of dollars as investors dumped their shares. Last week, the Adani Group cancelled a $2.5 billion share offering, promising to provide refunds to investors.
The billionaire’s fortune had swelled by more than 2,000 percent in recent years. Critics say he has benefited from strong relationships with Modi and his government, while others point out he also prospered under previous administrations.
“What action has been taken, if ever, to investigate the serious allegations made over the years against the Adani Group?” Jairam Ramesh, the Congress Party’s general secretary, said in a statement issued over the weekend. “Is there any hope of a fair and impartial investigation under you?” he said in a reference to Modi.
Shares in Adani Enterprises, the group’s flagship, wobbled Monday and were down 2.1 percent by midafternoon Monday. Its market value has shrunk by more than 50 percent since the Hindenburg report. Stock in five other Adani listed companies fell 5 percent to 10 percent.
The move by Adani to repay share-backed borrowing early addressed one of the key concerns raised by Hindenburg: heavy borrowing using group shares as collateral.
The wild swings in share prices have highlighted concerns over corporate governance, especially as the country tries to woo foreign investors worth sank to $59 bilion from $120 billion.