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Adani market losses snowball to $100 billion on discontinued stock sale

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discontinued stock sale

NEW DELHI, Feb 2 (Reuters) – Shares of Indian group Adani fell on Thursday after market turmoil forced the conglomerate to scrap a crucial $2.5 billion share offering, deepening its market losses to over $100 billion and raising concerns about the potential systemic impact.
The events are an embarrassing turn for the billionaire who has partnered with big-name foreign players and investors in a global business expansion that spans from ports to mining to cement.
Adani later on Wednesday called off the stock sale as the stock rout sparked by criticism from short seller Hindenburg intensified, despite the offer being fully subscribed on Tuesday. In the fallout from the attack, Adani also lost his title as Asia’s richest man.

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The group’s flagship company – Adani Enterprises (ADEL.NS) – plunged 10% after opening higher on Thursday. The other companies in the group – Adani Ports and Special Economic Zone (APSE.NS), Adani Total Gas (ADAG.NS), Adani Green Energy (ADNA.NS) and Adani Transmission (ADAI.NS) – fell 10% each , while Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) fell 5% each.

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Adani slipped in the world’s richest ranking to 16th place, according to Forbes’ list, from third last week.

“The sell-off could intensify during the afternoon session, as we have seen before. Unless Adani manages to regain the confidence of institutional investors, stocks will be in freefall,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities.
The fall in Adani shares has raised concerns about the likelihood of a wider impact on India’s financial system.
India’s central bank has asked local banks for details of their exposure to the Adani group of companies, government and banking sources told Reuters on Thursday. CLSA estimates that Indian banks were exposed to around 40% of Adani Group’s 2 trillion rupees ($24.53 billion) debt in the fiscal year ending March 2022. Read more
Citigroup’s (CN) wealth management unit stopped providing margin loans to its clients against Adani Group securities and decided to reduce the loan-to-value ratio for credit against Adani securities to zero on Thursday. , said a source.
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In New Delhi, opposition lawmakers submitted notices to the Indian parliament demanding a discussion on the US short seller’s report. Congress party lawmaker Manish Tewari said he would demand a parliamentary joint committee investigation into the matter, Reuters partner ANI reported.


Hindenburg’s report last week alleged misuse of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about the high level of debt and valuations of seven listed Adani companies.

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The Adani Group denied the charges, saying the short seller’s share manipulation allegation had “no basis” and stemmed from ignorance of Indian law. The group has always made the necessary regulatory disclosures, he added.

Earlier this week, Adani Group said it had the full support of investors, but investor confidence has crumbled in recent days.

As stocks plunged after the Hindenburg report, Adani managed to secure subscriptions to sell shares on Tuesday even though the stock price was below the issue’s offering price. But on Wednesday, stocks plunged again.

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In a late-night announcement on Wednesday, Adani said he was withdrawing the stock sale because “the company’s stock price fluctuated during the day.” Given these extraordinary circumstances, the company’s board felt that continuing the show would not be morally acceptable. to correct.”

Early Thursday, Adani said in a video address that “the interest of my investors is paramount and everything is secondary. Therefore, to protect investors from potential losses, we have withdrawn” the sale of shares.

Reporting by Chris Thomas, Aditya Kalra and Nallur Sethuraman in Bengaluru; Editing by Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.

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