Adani empire loses over $100bn
Under-fire Indian tycoon Gautam Adani’s empire has lost more than US$100 billion in value over the past week as shares in several firms plunged again yesterday, a day after the group cancelled a multi-billion-dollar public offering.
The billionaire’s sprawling conglomerate has been thrown into turmoil following explosive allegations of accounting fraud on Jan 24 by US short-seller Hindenburg Research.
Flagship firm Adani Enterprises dived 14% — having lost almost 30 percent Wednesday — and has now halved in value since the start of the year.
Other listed companies of Adani’s business empire were subject to trading halts after falling as much as 10% at the open in Mumbai.
Among them is Adani Total Gas — in which French oil major TotalEnergies holds 37.4% — which has now lost 52% since Jan 1.
Further panic has seen big banks including Credit Suisse and Citigroup stop accepting Adani bonds as collateral for loans to private clients, according to Bloomberg News.
The latest selling pressure came after Adani late Wednesday cancelled a $2.5 billion stock sale that was meant to help reduce debt levels — which have long been a concern — and restore confidence by broadening its shareholder base.
But the issue failed to attract “mom and dad” retail investors and only sold out thanks to large institutional buyers, fellow Indian tycoons and $400 million from the United Arab Emirates’ IHC.
The Adani Enterprises board said in a statement that going ahead with the issue “would not be morally correct” and that it would refund all payments.
Mr Adani himself insisted in a video statement that the “fundamentals of our company are very strong, our balance sheet is healthy and assets robust”.
“Once the market stabilises, we will review our capital market strategy,” he said, stressing that its record on paying back debt was “impeccable”.
Mr Adani, a 60-year-old publicity-shy school dropout, has seen his operations expand at breakneck speed, with shares in Adani Enterprises soaring more than 1,000% over the past five years.
Until last week, he was the world’s third-richest man, behind Twitter and
Tesla owner Elon Musk and France’s Bernard Arnault and family.
By yesterday he had slipped down to 16th place in the real-time Forbes rich list, losing his crown as Asia’s richest man to fellow Indian Mukesh Ambani.
According to Hindenburg Research, Adani has artificially boosted the share prices of its units by funnelling money into the stocks through offshore tax havens.
This “brazen stock manipulation and accounting fraud scheme” is “the largest con in corporate history”, Hindenburg said.
Adani said it was the victim of a “maliciously mischievous” reputational attack and issued a 413-page statement on Sunday that it said showed Hindenburg’s claims were “nothing but a lie”.
Hindenburg, which makes money by betting on stocks falling, said in
response that Adani failed to answer most of the questions raised in its report.
Critics say Mr Adani’s closeness to Prime Minister Narendra Modi, also from Gujarat state, has helped him win business and avoid proper oversight.
Analysts say that the turmoil has hurt India’s image just as it seeks to woo overseas investors away from China.
Independent markets commentator Srinath Sridharan said the crisis was a key test for India’s financial regulators.
“Are they asking questions, demanding disclosures? All that is extremely critical,” Sridharan said, calling the mayhem a “lesson for India Inc”.
India’s central bank has asked lenders for details of their exposure to the Adani Group — whose interests include ports, telecoms, airports, media and coal, oil and solar power — Bloomberg reported citing unnamed sources.