Symbolic image of Adani Group’s logo on one of its buildings in Ahmedabad | Photo Credit: Reuters
Adani Enterprises Ltd on Friday launched secondary share sales worth a record $2.45 billion to retail investors as heavy selling in Adani group companies intensified. After attack by US-based short seller,
The Adani Group, controlled by Gautam Adani, one of the world’s richest men, lost $11 billion in market capitalization in India on Wednesday after Hindenburg Research raised concerns in a report about debt levels and use of tax havens. US bonds saw a decline.
Adani Group has dismissed the report as baseless,
Adani Enterprises aims to use the share sale proceeds for capital expenditure and to pay down debt. The anchor portion of the sale saw participation from investors including Abu Dhabi Investment Authority on Wednesday.
Bidding for the Adani Enterprises share sale to retail investors began on Friday and will close on January 31. The firm has set a minimum price of ₹3,112 ($38.22) and a maximum of ₹3,276 for a share.
Shares fell on Friday
But shares of the group’s seven listed companies fell on Friday, bringing their cumulative market capitalization losses to nearly $30 billion as of Friday morning.
Adani Enterprises fell as much as 6.2% and closed 3.4% down at Rs 3,271.
Adani Transmission Ltd plunged 19.2% in early trade and Adani Total Gas sank 19.1% in its biggest daily decline since mid-March 2020, while Adani Green Energy sank 15.8% before paring some losses.
In the broader market, the 30-share BSE benchmark was trading 537.91 points, or 0.89%, lower at 59,667.15.
Hindenburg charges
In his report, Hindenburg said that major listed Adani group companies had “substantial debt”, leaving the group on a “precarious financial footing”, and that “sky-high valuations” had pushed up the share prices of the seven listed Adani companies. was raised to 85. % beyond the actual value.
Billionaire US investor Bill Ackman said on Thursday that he found the Hindenburg Report “highly credible and extremely well-researched”.
Hindenburg said it held short positions in Adani through its US-traded bond and non-Indian-traded derivative instruments, meaning it is betting that their price will fall.
In a statement, Adani Group Legal Head, Jatin Jalandhwala said the report was a “deliberate and reckless attempt by the foreign entity” to mislead the investor community and the general public.
He insisted that this was meant to “bring off the FPO (follow-on public offering) from Adani Enterprises”. “The maliciously mischievous, unsubstantiated report published by Hindenburg Research on 24 January 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in the Indian stock markets created by the report is a matter of great concern and has caused undue suffering to Indian citizens.
Adani brushes off concerns about debt levels
The Adani group has repeatedly faced and dismissed concerns about debt levels. It defended itself in a presentation titled “Myths of short sellers” on Thursday, saying deleveraging by promoters – or major shareholders – was “in a high growth stage”.
Samrat Dasgupta, chief executive, Esquire Capital Investment Advisors, said, “I don’t see much impact from the Hindenburg report. reuters, The share sale of Adani Enterprises “must be done successfully”.
Jefferies said in a client note that Adani Group had shared details of debt and leverage levels, and it “does not see material risks arising in the Indian banking sector”.
Jefferies said Adani Group’s consolidated gross debt stood at ₹1.9 trillion ($23.34 billion).
Adani has maintained that its debt is at a manageable level and no investor has raised any concerns.
Adani Enterprises’ net profit doubled to ₹9 billion ($110.31 million) for the period ending September 30, 2022, while its total income nearly tripled to ₹795 billion, according to its share sale prospectus.
The company’s total liabilities as of September 2022 were ₹869 billion ($10.64 billion), as shown in the prospectus.
(With inputs from PTI)