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India’s Adani group shares fell on Thursday as the Gautam Adani-led group delayed a $2.5 billion share sale amid a volatile market, bringing its total market capitalization losses since last week’s short-seller attack to $100 billion.
The cancellation of Adani Enterprises’ share sale is a significant setback for Adani, the school dropout-turned-billionaire whose fortunes have risen quickly in recent years in tandem with the stock values of his enterprises.
Even though the offer was completely subscribed on Tuesday, Adani pulled off the share offering on Wednesday as a stock market meltdown prompted by US short-seller Hindenburg’s complaints escalated. Adani has also lost his title as Asia’s richest man as a result of the short-onslaught.
Adani Enterprises, the group’s flagship company, fell 10% after beginning higher on Thursday. Adani Ports and Special Economic Zone, Adani Total Gas, Adani Green Energy, and Adani Transmission all sank 10%, while Adani Power and Adani Wilmar fell 5% each.
The stock market crash and cancellation of the share offering are an embarrassment for the billionaire, who has built ties with foreign companies in his global growth of enterprises ranging from ports to mining to cement.
According to Forbes, Adani is now the world’s 16th richest person, down from third last week.
According to government and banking sources, India’s central bank has requested information about local banks’ exposure to the Adani group of enterprises. CLSA estimates that Indian banks were exposed to roughly 40% of Adani Group’s debt of 2 trillion rupees ($24.53 billion) in the fiscal year ending March 2022.
Earlier this week, the Adani group stated that it had total investor support, but investor confidence has dwindled in recent days.
Citigroup’s wealth division has ceased offering margin loans to its clients against Adani Group shares, according to a source with firsthand knowledge of the situation on Thursday. Citi did not respond to a request for comment.
The Adani group was accused of inappropriate use of offshore tax havens and stock manipulation in Hindenburg’s investigation last week. It also expressed concern over Adani’s huge debt and the valuations of seven publicly traded Adani entities.
The Adani group has refuted the allegations, claiming that the short-claim seller’s stock manipulation has “no validity” and arises from a lack of knowledge of Indian law. The company also stated that it has always made the required regulatory disclosures.
Even though the stock’s market price was lower than the issue’s offer price after the Hindenburg report, Adani was able to acquire share sale subscriptions on Tuesday. However, markets fell again on Wednesday.
In a late-night announcement on Wednesday, Adani said he was withdrawing the share offer as the company’s “stock price has fluctuated over the day. Given these unique conditions, the company’s board of directors determined that proceeding with the problem would be morally wrong.”
