The 60-year-old tycoon had reason to be excited: Last-minute bids from his port helped the power empire’s flagship close a record $2.5 billion share sale that sent the stock rout despite a short-seller onslaught. used to trigger as soon as he left for home Tel Aviv At 6:13 p.m. local time aboard his Bombardier Global 6500 private jet — a relatively new acquisition with super-speedy wireless connectivity — the industrialist spent a lot of time in the quietest part of the flight cabin on a marathon call.
But the brutal selloff in Adani Group shares continued on Wednesday, February 1, wiping out more than $80 billion of market value in a week despite the reported successful completion of the share sale.
Concerned investors began calling Adani’s finance team to express concern, according to people familiar with the developments. WHO He did not wish to be named as the discussion was private.
Headwind Building
One of them was the Royal Group, the parent company of Abu Dhabi’s International Holding Company, which prompted the group to reconsider. Adani Enterprises Ltd’s share sale, one of the people said.
As of Wednesday afternoon, a state-run financial institution – one of the anchor investors in the follow-on offer – said it would not extend further support to the group. Earlier in the day, opposition parties created ruckus Narendra Modi Chanting of “Adani, Adani” during government, union in Parliament budget speech, The tycoon often tailors his corporate strategy to Modi’s nation-building priorities.
In India, around 5 pm on Wednesday, Adani asked to call an emergency meeting of the board in 30 minutes. The share sale was being terminated. The filing hit local stock exchanges in India at 10:21 p.m., marking a dramatic U-turn.
In barely 19 hours, India’s biggest ever follow-on share sale was wiped out from completed deals.
Representative for Royal Group, IHC and Adani Group did not immediately respond to written requests for comment outside office hours.
protect relationships
Adani decided to forego the short-term victory of nabbing the follow-on offer to protect its long-term relationship with marquee investors, who were otherwise staring at some embarrassing mark-to-market losses on the amount they made .
And in one fell swoop, the we based short seller Hindenburg The research, which published a scathing report on January 24, claimed the accident to be the biggest ever.
In his explosive detail, Hindenburg accused Adani’s group of “shameless” fraud and stock market manipulation, money laundering as well as other alleged crimes, which he dubbed “the biggest thief in corporate history”.
The Adani Group hit back saying the report was “fake,” “maliciously mischievous” and threatened legal action.
In its 413-page Sunday rebuttal, it called the Hindenburg report and its short stipulation a “calculated securities fraud” as well as an attack on India and its institutions.
Three days later, its stock sale was revealed amid an uproar.
disappointed attendees
A frustrated attendee at Adani’s emergency Wednesday meeting said a small seller had launched an attack in just a week to destroy years of hard work.
A veteran dealmaker who assisted in the share-sale process said he had never seen such cancellation of an equity offering in a career spanning nearly two decades.
But the sense of relief among major investors was palpable. state run Insurance Corporation of India Ltd, which is a shareholder in five Adani group companies, saw the decision as a gesture of good corporate governance, according to people familiar with the matter.
Similarly Adani sold it too. Addressing investors in a video early Thursday to explain the sudden change, he said: “For me, the interest of my investors is paramount and everything else is secondary.”
He said that he wanted to protect them from harm. “Despite the volatility in the stock this past week, your faith and trust in the company, its business and its management has been extremely reassuring and humbling to all of us.”
However, the selling continued. As of Friday, half the group’s value, or more than $110 billion, had been eroded since the release of the Hindenburg Report.
The impact on India’s wider market was also huge. As of Thursday, the rupee had fallen against all its Asian counterparts in the period, while spreads on an index of bonds in the nation widened to the widest level in four weeks.
distancing myself
The ripple effects prompted Modi’s government – which is believed to have close ties with Adani – to begin publicly addressing and distancing itself from the group affected by the scandal. While Adani’s interests, from ports to energy, are inextricably linked with the country’s development plans, government officials have spoken out about its impact on the wider economy.
“It is between a private company and the regulator and the market; “It has nothing to do with the macroeconomics,” the country’s finance secretary TV Somanathan said in an interview on Thursday.
The arrangers of Adani Enterprise’s canceled equity offer have had to reconcile themselves with minuscule fees and make what they could from what was supposed to be a mega follow-on share sale. People with knowledge of the matter said a large portion of the $12 million that the investment banks were set to earn depended on the success of the deal. They are now expecting only minimal compensation for their work on offer.
Adani deal arranges scrap from expected $12 million payday
As the turbulent week drew to a close, the embattled tycoon negotiated with creditors to prepay some loans backed by pledged shares, as some banks stopped accepting the group’s securities as collateral.
“The dust hasn’t settled yet,” Alok Churiwala, managing director of Mumbai-based Churiwala Securities Pvt Ltd, said on Thursday. on the way forward.”
– With assistance from Alisa Odenheimer, Baiju Kalesh, Archana Narayanan, Anto Antony, Ragini Saxena and Vidya Root.
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