Adani No Longer Asia’s Richest, Market Rout Hits $86 Billion

 

Turmoil surrounding the Adani conglomerate continued on Wednesday with total market cap loss of the Indian tycoon’s top companies plunging to $86 billion over the past week.

Gautam Adani is no longer Asia’s richest person. Wednesday’s stock losses saw him slip from third to 10th on Forbes rich list with an estimated net worth of $84.1 billion, just below Reliance Industries’ chairman Mukesh Ambani, whose wealth was put at $84.4 billion.

A report by Hindenburg Research last week alleged that the Adani group manipulated stock values through improper used of offshore tax havens. It also voiced concerns about the high debt level and valuations of seven listed Adani companies.

It has heightened scrutiny of the conglomerate with an Australian regulator saying on Wednesday that it would be reviewing the allegations to see if further enquiries are warranted.

The Adani Group has denied Hindenburg’s allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made necessary regulatory disclosures, it added.

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Headaches likely to continue

The worsening rout comes despite the group managing to muster support from investors to haul a share sale for flagship firm Adani Enterprises over the line on Tuesday.

“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” Ambareesh Baliga, a Mumbai-based independent market analyst, said.

“With the stocks down despite Adani’s rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise,” Baliga added.

Adani Enterprises, often described as the incubator of Adani businesses, plunged nearly 27% on Wednesday to bring its losses since the Hindenburg report to more than $15 billion. Adani Power fell 5%, while Adani Total Gas slumped 10%, down by its daily price limit.

Adani Transmission was down 6% and Adani Ports and Special Economic Zone dropped 15%.

Adani Total Gas, a joint venture between France’s energy major Total and Adani Group, has been the biggest casualty of the short seller report, losing about $27 billion.

 

Indian equities see $1.5bn outflow

Data also showed that foreign investors sold a net $1.5 billion worth of Indian equities since the Hindenburg report – the biggest outflow over four consecutive days since September 30.

Headaches for the Adani Group are expected to continue for some time.

India’s markets regulator, which has been looking into deals by the conglomerate, has also said it will add Hindenburg’s report to its own preliminary investigation.

State-run Life Insurance Corporation (LIC) on Monday said it would seek clarifications from Adani’s management on the short seller report. The insurance giant was, however, a key investor in the Adani Enterprises share sale.

Hindenburg said in its report it had shorted US-bonds and non-India traded derivatives of the Adani Group.

 

• Reuters with additional editing by Jim Pollard

 

NOTE: The headline on this report and detail in the text was amended after the market cap figure increased on February 1, 2023.

 

 

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