Indian watchdog probes $86bn Adani stock sell-off

Indian watchdog probes $86bn Adani stock sell-off
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  • Adani shares suffer further setback on Indian stocks
  • Stocks plunge a day after a successful stock sale
  • SEBI investigates possible irregularities in the sale of shares for $2.5 billion
  • The billionaire falls out of the top 10 on the Forbes rich list
  • Adani Enterprises, Adani Ports suffer worst day on record

BENGALURU, Feb 1 (Reuters) – India’s market regulator is examining a drop in shares of billionaire Gautam Adani’s companies, a source with direct knowledge told Reuters, as losses triggered by a scathing report from a seller US shorts soared to $86 billion on Wednesday. .

The Securities and Exchange Board of India (SEBI) is also looking for in several of the allegations made by Hindenburg Research, and in any possible wrongdoing in a sale of key shares by flagship Adani Enterprises (ADEL.NS) Tuesday, the source said, speaking on condition of anonymity.

Spokespersons for SEBI and Adani Group did not immediately respond to requests for comment.

Among several allegations, Hindenburg accused Adani Group last week of using offshore tax havens and manipulating stocks. He also expressed concern about the high debt and valuations of Adani’s seven publicly traded companies.

the group has denied the accusations, saying the short seller’s narrative of stock manipulation is “baseless” and stems from an ignorance of Indian law. He has always made the necessary regulatory disclosures, he has been added.

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On Tuesday, Adani Group rallied investor support for a $2.5 billion investment sale of shares for Adani Enterprises, in what some saw as a seal of confidence from investors at a time of crisis.

But the collapse of Adani group stocks and bonds resumed on Wednesday, with shares of Adani Enterprises plunging 28% and Adani Ports and Special Economic Zone. (APSE.NS) falling 19%, the worst day on record for both.

The losses mark a dramatic setback for Gautam Adani, the school dropout-turned-billionaire whose fortune has risen rapidly in recent years in line with the value of shares in his businesses that include ports, airports, mining and cement.

Now the tycoon, who fell out of the top 10 on the Forbes rich list on Wednesday, is struggling to stabilize his businesses and defend his reputation.

Underscoring nervousness in some quarters, Bloomberg reported that Credit Suisse (CSGN.S) it had stopped accepting bonds from Adani group companies as collateral for margin lending to its private banking clients. Credit Suisse had no immediate comment.

Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a major factor in Wednesday’s stock declines.

After losing $86 billion in recent days, equivalent to 16% of India’s annual budget spending of $550 billion announced on Wednesday, the seven listed Adani Group entities now have a combined market capitalization of around $ 131 billion.

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Indian credit ratings agency ICRA Ltd, a unit of Moody’s Investors Service, said on Wednesday it was monitoring the impact of developments on its rated portfolio at Adani Group.

It added that while the group’s large debt-financed capex plan was a “key challenge”, some of it was discretionary in nature and could be deferred, depending on the liquidity position.

An Australian regulator said Wednesday that it also review Hindenburg’s accusations to see if further investigation was warranted.

Wednesday’s stock losses saw Adani slip to 15th on the Forbes rich list with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, chairman of Reliance Industries Ltd. (RELI.NS) who ranks ninth with a net worth of $83.7 billion.

Prior to Hindenburg’s report, Adani was ranked third.

Asked if he was concerned about broader losses in Indian stock markets due to the fall in Adani Group shares, Economic Affairs Secretary Ajay Seth said the government “does not comment on issues related to a company in particular”.

India’s benchmark Nifty index has fallen 2.7% since the Hindenburg report. The data also shows that foreign investors sold $1.5 billion net worth of Indian stocks after the report, the biggest outflow for four consecutive days since September 1. thirty.

Shares in Adani Power (ADAN.NS) and Adami Wilmar (ADAW.NS) fell 5% each on Wednesday, and Adani Total Gas (ADAG.NS) fell 10%, and all three fell by their daily price limits. Adani Transmission (ADAI.NS) down 3% and Adani Green Energy (DNA.NS) it was down 5.6%.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA)has been the biggest victim of the short sellers report, losing around $27 billion.

Shares in cement companies ACC (ACC.NS) and Ambuja Cement (ABUJ.NS)that Adani Group bought from the Swiss company Holcim (HOLN.S) for $10.5 billion last year, fell 6.2% and 16.7%, respectively.

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Dollar bonds issued by Adani entities also resumed their slide on Wednesday. Adani Ports’ US dollar-denominated bonds due February 2031 led the losses, falling 3.59 cents to 67.58 cents.

Hindenburg said in his report that he had shorted Adani Group’s US bonds and non-Indian-traded derivatives.

Reporting by Chris Thomas in Bangalore and Aditya Kalra and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran, Nikunj Ohri, and Sethuraman NR; Edited by Edwina Gibbs, Aditya Kalra, and Mark Potter

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