S&P Dow Jones said Adani Enterprises will be removed from sustainability index

New Delhi/Mumbai:

Adani Group’s market losses exceeded $100 billion on Thursday, a day after the group’s flagship firm abandoned a $2.5 billion (Rs 20,000 crore) stock offering, raising concerns about a possible systemic impact.

Another challenge for Adani came on Thursday when S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices, effective February 7, which makes the shares less common for sustainability-minded funds. Will make it attractive

Besides this, the National Stock Exchange said it has placed additional watch on shares of Adani Enterprises, Adani Ports and Ambuja Cements.

However, Adani Group Chairman Gautam Adani is in talks with lenders to prepay and issue pledged shares to restore confidence in the financial health of his group, Bloomberg News reported on Thursday.

Adani Enterprises’ share sale comeback comes a week after a critical research report by US-based short-seller Hindenburg Research dealt a dramatic blow to founder Adani.

The cancellation of the sale of shares sent shockwaves through the markets, politics and business. Adani’s shares plummeted, with opposition MPs calling for a comprehensive probe and the Reserve Bank of India (RBI) swung into action to probe the exposure of banks in the group. Meanwhile, Citigroup’s wealth unit stopped offering margin loans to customers against Adani Group securities.

The crisis marks a dramatic turn of fortune for Adani, which in recent years has forged partnerships with foreign giants such as France’s Total Energy and attracted investors such as Abu Dhabi’s International Holding Co., as it moves from ports to power. Pursuing global expansion.

In a surprise move late on Wednesday, Adani called off the share sale as criticisms of Hindenburg accelerated the fall of shares, despite it being fully subscribed the day before.

“Adani may have triggered a crisis of confidence in Indian stocks and this could have wider market implications,” said Ipek Ozkaredskaya, senior market analyst at Swissquote Bank.

Shares of Adani Enterprises fell 27% on Thursday, closing at their lowest level since March 2022.

Other group companies also lost further ground, with Adani Total Gas, Adani Green Energy and Adani Transmission losing 10% each, while Adani Ports and Special Economic Zone declined around 7% each.

Since the Hindenburg report on January 24, the group’s companies have lost nearly half of their combined market value. Adani Enterprises – described as an incubator of Adani’s businesses – has lost $26 billion in market capitalisation.

Adani is no longer even Asia’s richest man after slipping to 16th in the Forbes ranking of the world’s richest people, his net worth nearly halving in a week to $64.6 billion.

wider concerns

Adani’s falling stock and bond prices have raised concerns about the potential for wider ramifications for India’s financial system.

Government and banking sources told Reuters on Thursday that the RBI has asked local banks for details of their exposure to the Adani group.

CLSA estimates that Indian banks accounted for about 40% of Adani Group’s $24.5 billion in loans in the fiscal year to March 2022.

Dollar bonds issued by Adani group entities extended losses on Thursday, with Adani Green Energy’s notes falling to a record low. Reuters, citing sources, reported that Adani group entities made fixed coupon payments on outstanding US dollar-denominated bonds on Thursday.

Monika added, “We see the market losing confidence in how to measure where the bottom could be and although there will be short covering rebounds, we expect more fundamental downside risk to margin due to more private banks Cuts or reductions are likely.” Hsiao, chief investment officer at Triada Capital, a Hong Kong-based credit fund.

Opposition parties have given notice in Parliament demanding discussion on short-seller’s report.

The Congress had yesterday demanded setting up of a joint parliamentary committee or a Supreme Court-monitored probe, while some MPs raised anti-Adani slogans inside Parliament, which was adjourned for the day.

Adani vs Hindenburg

Data from Dealogic shows that Adani will see acquisitions worth $13.8 billion in 2022, the highest ever and more than double that of last year.

The canceled fundraising was significant for Adani, which said it would use $1.33 billion for green hydrogen projects, airport facilities and greenfield expressways, and $508 million to repay debt at some units.

The Hindenburg report alleged improper use of offshore tax havens and stock manipulation by the Adani group. It also raised concerns about the high debt and valuation of seven listed Adani companies.

The Adani Group has denied the allegations, saying that the allegation of stock manipulation had “no basis” and stemmed from ignorance of Indian law. It said it has always made necessary regulatory disclosures.

Adani managed to get the share sale subscription on Tuesday even though the market price of the stock was lower than the offer price of the issue. Maybank Securities and Abu Dhabi Investment Authority had bid for the anchor portion of the issue, the investment will now be reimbursed by Adani.

Late on Wednesday, the group’s founder said he was withdrawing the sale in view of falling share prices, adding that his board felt it “would not be ethically correct” to go ahead with it.

(This story has not been edited by NDTV staff and was auto-generated from a syndicated feed.)