The majority of Adani Group shares dropped on Monday as the Indian conglomerate’s response to investor criticism of American short sellers fell flat, throwing the market into a tailspin and wiping off $65 million of the value of the group’s shares.
The Indian company, led by Asia’s richest man Gautam Adani, engaged in a dispute with Hindenburg Research and responded to a short seller report from the previous week on Sunday, raising questions about its level of debt and usage of tax havens.
Adani asserted that he has made the required regulatory disclosures and conforms with all local regulations. On Monday, the stock prices of Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power, and Adani Wilmar all dropped by 5% to 20%.
Facing a crucial test this week, Flagship Adani Enterprises (ADEL.NS) wavered between gains and losses before closing up 4.8% on a follow-on share offering. That was well below the price for the issue, which, if successful, would have been the largest share offering of its kind in India.
Adani Enterprises’ $2.5 billion secondary stock sale closed for a second day amid weak investor sentiment. The stock closed at Rs 2,892.85, down 7% from the lower end of the offer price band of Rs 3,112. The upper band is Rs 3,276.
1.4 million shares, or slightly more than 3% of the 45.5 million shares offered, have now been offered to Adani, according to data from stock markets on Monday. On Tuesday, Will finalised the agreement.
According to the data, there were no offers from foreign and domestic institutional investors and mutual funds.
Hemang Jani, the equity strategist at Motilal Oswal Financial Services, said: “Retail participation is likely to remain subdued due to falling offer prices, and sentiment remains on hold due to the Hindenburg controversy”.
International Holding Company of Abu Dhabi Group (IHC.AD) said on Monday that it would contribute 1.4 billion dirhams ($381.17 million) to the offer.
Even though reports indicated that bankers in the largest-ever secondary share sale in the nation would further prolong the deadline, Adani Group stated on Saturday that the sale proceeded as planned and at the intended issue price. After January 31, the price may be lower. Price change for its shares.
Indian regulations state that a share offering must receive a minimum 90% subscription; If this does not happen, the issuer must return the entire amount. Maybank Securities and Abu Dhabi Investment Authority were among the investors who bid for the principal part of the issue.
According to Maybank, there is “no financial consequence,” as the subscription to Adani’s offering was entirely funded by client money.
LIC collected 5% of the anchor portion for $734 million. He already owns a 4.23% stake in flagship Adani, while his other exposures include a 9.14% stake in Adani Ports and a 5.96% stake in Adani Total Gas.
U.S. dollar-denominated bonds issued by Adani Ports and Special Economic Zones continued to decline for a second week, with August 2027 bonds falling 5 cents to 73.03 cents, the lowest level since June 2020. Other dollar-denominated bonds in the group were also trading lower.
The maker of the indexes, MSCI, stated that it was monitoring factors that “may affect the eligibility of the relevant assets” in its indices and was looking for market players’ opinions on Adani.
In its response on Sunday, Adani highlighted its ties with local and international banks and its access to various funding sources and structures, including U.S. banks Citigroup (C.N.) and JPMorgan Chase & Co (JPM.N), as well as Other lenders listed, including BNP Paribas (BNPP.PA), Credit Suisse (CSGN.S), Deutsche Bank (DBKGn.DE), Barclays (BARC.L) and Standard Chartered (STAN.L).
The stock market crash has come as a dramatic blow to 60-year-old Adani. The school dropout’s shocking rise coincided with more than 1,500% gains in some of his group’s shares in three years, making him the world’s third-richest person before slipping to eighth place on Monday’s Forbes list.
In response to Adani’s rebuttal, Hindenburg said the company’s “response largely confirmed our findings and ignored our key questions.”
Hindenburg said in his report that Adani’s companies had “substantial debt” and that shares of seven Adani-listed companies are down 85% due to “sky-high valuations”.